CGT Question

Author
Discussion

apguy

Original Poster:

827 posts

254 months

Monday 1st December 2003
quotequote all
I'll be getting expert advice on this one - but just so I don't sound like an idiot when I ask my questions I'd be grateful for any feedback on the following scenario:

I own 2 properties (flat and house) and am in the process of completing the sale of flat.
I know I have to pay CGT on the sale of a 2nd property but can I arrange my affairs so that the flat is my main property and the house the 2nd property, then after selling the flat have the house as my main property?
I've owned both properties for >6 years and I did/do actually occupy both of them (flat during week, house at weekends) so I have bills/council tax etc to prove occupancy. I'm guessing that if I nominate the flat as primary residence, then the inland revenue will count 6+ years of house price increase as CGT if/when I come to sell the house?

tomash

175 posts

286 months

Monday 1st December 2003
quotequote all
In the middle of this one at the moment.

If you nominate the flat as primary and sell thus avoiding CGT on a primary residence then you may be able to nominate the house a s your primary residence thus avoiding CGT on both. You may find that you have to continue living in the house for a given period before the house is exempted.

If you have to pay CGT the way it works is difference between value at acquisition and value at disposal is the taxable gain. Less indexation at roughly 2.5% per year to cover natural inflation. Less taper relief at 20% for 6 years goes to 25% at 7 years and up to 40% after 10 years. Less your CGT allowance currently £7700 and then you treat the gain as income so you will pay CGT at your base rate. However if you have had the house for 6 + years then its more than likely that it will have doubled in value so you will almost definately hit the 40% bracket if you dont pay that already.

Just my 2p. Definately get advice on this one it could save you a lot.