Capital Gains Tax

[donardboy]

I am in the process of selling my house which I have rented whilst living in quarters. Problem is I intend to sell next year and have been given conflicting info regarding capital gains tax (CGT). One source states that as I would live in the house, but for my service responsibilities, I am exempt. Another source states that I have a liability to CGT.

Have any pruners experienced a similar process and able to offer sound advice.


Many Thanks in advance

DB

[airborne_artist]

Have read of http://www.hmrc.gov.uk/helpsheets/ir283.pdf

[mary_hinge]

I sold a house a few years back, property was rented out for some time whilst I was in the RAF, and I was resigned to paying CGT.

I was advised to speak to an accountant and I’d recommend the same prior to putting the property on the market. It is surprising just what can be claimed as way of relief on this, such as repairs, wear and tare, insurance etc. Best £150 I’ve paid, saved me in the region of £7,000 and effectively reduced my liability for CGT to zero:ok:

[Cumbrian Fell]

Write to your Tax Office (in the land of no vowels) and advise them that the property would be your principle private residence if it were not for the exingencies of the service. Simple. Costs about 30p for a stamp.

[charliegolf]

Cumbrian,

The land of no vowels. That would make it Wls, wouldn't it?

CG

Even 'Cymru' has one!

[movadinkampa747]

Interestingly enough Vowels differ from consonants in that there is no noticable obstruction in the vocal tract during their production:} . The Air escapes in a relatively unimpeded way through the mouth and/or nose.

If you try saying aaaaa, iiiii, uuuuu, eeeeee, oooooo to yourself you will look stupid, but you should be able to feel that, although your tongue moves about your mouth, it never actually obstructs the airflow:8 . You should also be able to feel that the position of the tongue changes for each of those vowels:suspect: .

[donardboy]

Many thanks for info so far gents, especially for the link from airborne artist. Just discovered a further complication in that my property has just over 10 acres so have to convince the taxman that it is within the permited area (ie: not too much land for house).

please don't post that if I have over 10 acres I can afford CGT.

Anyone experienced this scenario before, Any legal advice in avoiding this liability would be much appreciated.

HELP !!!

[movadinkampa747]

You will not have to pay CGT when you dispose of your home if all the following conditions are met.

* Throughout the period that you owned it, it was your only home.
* You did actually use it as your home all the time that you owned it.
* Throughout the period that you owned it, you did not use it for any purpose other than as a home for yourself, your family and no more than one lodger.
* The house and garden do not exceed 5,000 square metres (about one and a quarter acres - roughly the size of a football pitch).

Even if not all of these conditions are met, you may still be entitled to relief against all or part of the gain.

[airborne_artist]

Sounds like time to visit a good accountant who is experienced in personal taxation. It'll cost you an hour or two at the most.

I think you'll find the garden/grounds area issue only comes into play if you sell a part separately from the main residence, eg to a developer/neighbour. If you are selling the entire residence in one parcel then it's not an issue.

[charliegolf]

Could you put forward the argument that you only rented the land within the 'curtilage' of the house, and not the 10 acres.

CG

[movadinkampa747]

Could you put forward the argument that you only rented the land within the 'curtilage' of the house, and not the 10 acres.
CG

The enclosed area immediately surrounding a house or dwelling. 10 acres hardly immediately surrounds the house.

[Ginseng]

The crucial factor in cases like these is your intention to reoccupy the home, or otherwise. In other words, whilst you were away occupying other accommodation provided in association with your work, you maintained the house as your principle private residence. Even though you may have rented it to someone else, this was only because you could not occupy it yourself due to the exigencies of your job. It was always your firm intention to re-occupy your property at a later date when circumstances permitted. Provided that you can honestly declare that to hmrc, there should be no question of a liability for CGT on sale, even if some other circumstance later prevented you from re-occupying the property as you had intended. Remember also that, whatever the circumstances, any period when you did occupy the property, and in all cases the last 5(?) years of ownership, is never liable to be assessed for CGT.

Regards

Ginseng

[Shadwell the old]

Donardboy,

Please PM me. This is what I now do for a living. I will need to get some more details from you to assess whether or not you are liable, and if so for how much. You would be amazed how you could reduce any liability if there is one.

Shadwell

[detgnome]

Further to all the posts above, the help leaflet posted by AA states that if you live in job related accom then 'the dwelling-house you intend to occupy is treated as actually being occupied by you as a residence during the period in which you have the intention to occupy it, even if you never actually live there' and is therefore exempt from CGT. If you look at leaflet IR202 as it suggests, then you will find that HM Forces are classed as living in job related accom. Therefore, vis a viz etc your residence is exempt, even if you rent it out and even if you never actually live in it. When you sell your home you will have done no wrong if you tell the HMRC absolutely nothing. If they want to ask questions I would put the onus on them rather than trying to be too helpful.

[Ginseng]

Coming back to the grounds issue, AA is right. If the parcel of land associated with the house is greater than a certain size, and you were to sell part of it off to a developer, hmrc would be entitled to view that as realising a capital gain on a sale of excess land for development. But the area in question is rather larger than the average garden of a house. If you sell the whole house and all its current grounds as a single package to a new occupier, you have not designated any part of the sale as land for separate development; the whole parcel then remains the same principal private residence and is not normally liable for CGT.

Regards

Ginseng

[donardboy]

Gentlemen,

Many many thanks for your contributions which are much appreciated. I am now in a much better position to make a decision as to whether to infom HMRC. I didnt mention earlier which may be an important fact (I don't know) but I do intend to sell and buy.

Thanks again

DB

[airborne_artist]

Do you mean that you are selling your current house, and immediately buying another? It has no bearing at all on the CGT position of the first house.

[detgnome]

If you can justify the sale on the basis of, for instance, that you need a bigger home, or that you are planning to settle in a different area then you should be ok. Selling your 4 bed house to buy 3 investment apartments may be viewed differently...!





NB congrats to me, 100 posts.

[Ginseng]

AA is right again. If this house is your only one (your SFA doesn't count as it is not yours - you are not beneficial owner), then selling it and buying another is simply a matter of retaining one house as your principle private residence. Your position is no different to that of any other person who moves occasionally from one place to another, selling and buying houses as they go. The only potential complication would be if you found yourself remaining ownership of 2 or more houses at the same time, since you can only have one principal private residence at a time. You would then have to nominate, with the agreement of hmrc, which one was your PPR. The other would then cause a potential liability to CGT on sale, but even then, once your personal annual Capital Gains allowance (about £8,000 this year), and the same again for Mrs D (if there is one!) is taken into account, you may still have no actual CGT to pay if you don't hold the second house for too long.

Regards

Ginseng