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Hi,

I have a property I bought 6 yrs ago, my first property. I moved in for a year, but due to losing my job, I decided to move back in with my parents and rent the property out.

Whilst it's been rented I bought a flat and moved out several years down the line. I've had tennants come and go, but currently I'm having trouble and am going through an eviction process with my tennant. Once my tennant has been evicted I want to sell the place as my first property and avoid paying capital gains tax - how can I do this?

Is there a minimum amount of tme I need to stay in the property before selling it? Do I need to show bills in my name at the address? Should I avoid telling my solicitor and/or estate agent the property was rented out?

thanks

Dan

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Hi,

I have a property I bought 6 yrs ago, my first property. I moved in for a year, but due to losing my job, I decided to move back in with my parents and rent the property out.

Whilst it's been rented I bought a flat and moved out several years down the line. I've had tennants come and go, but currently I'm having trouble and am going through an eviction process with my tennant. Once my tennant has been evicted I want to sell the place as my first property and avoid paying capital gains tax - how can I do this?

Is there a minimum amount of tme I need to stay in the property before selling it? Do I need to show bills in my name at the address? Should I avoid telling my solicitor and/or estate agent the property was rented out?

thanks

Dan

You are most unlikely to have a taxable gain. The last 3 years of ownership and the year you were resident are exempt; and by the time you take off lettings relief the chances of you having a gain exceeding the annual allowance of c. £10K are pretty low, unless you got a spectacular bargain 6 years ago. there may be other reliefs, but you'd need to read up the leaflet (available online from HMRC's website) to check.

This, of course is on the current rules - June 22nd could change all that, but it's too late to sell by then unless you get it into an auction very fast.

DON'T conceal the letting - that's fraud and HMRC could throw the book at you.

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Cartimandua is basically right. Can't say I've heard of "lettings relief" though. You could've offset your tax bill with the costs of renting it out (management fees, mortgage interest, insurance policies, maintenance) - but that is an income tax point, not a capital gains one.

How much did you buy it for and how much are you likely to sell it for? Not interested in mortgage amounts or anything, just the headline figure. And I presume from what you say that you bought this on your own (no girlfriend to share the profit/taxable gain with)?

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DON'T conceal the letting - that's fraud and HMRC could throw the book at you.

Unfortunately it doesn’t work this way.

There's no way for you to tell the revenue the circumstances and let them work out the gain after all reliefs.

It's up to you to understand the relief rules, calculate the taxable gain and enter the number in the relevant box. If you get this wrong you could be fined.

Note, that you will have to fill in a tax return because of this sale (if you don't already do so) because you will (presumably) have disposed of a taxable asset worth more than four times the annual CGT allowance even if the actual gain is less than this allowance.

It might be worth finding an accountant who will do this for you. It will be cheaper than the fine.

tim

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Lettings relief:

Lettings relief is worth the same as the figure calculated for private residence relief or £40,000, whichever is lower. So if you worked out that you would get £30,000 in private residence relief, you would also get £30,000 lettings relief. But if your private residence relief was £60,000, you would get only £40,000 lettings relief.

DON'T conceal the letting - that's fraud and HMRC could throw the book at you.

Unfortunately it doesn’t work this way.

There's no way for you to tell the revenue the circumstances and let them work out the gain after all reliefs.

Yep. What I meant was, don't just pretend it was your PPR all along so as not to have to fill in a tax return.

Most people HATE filling in returns; even if you are capable of it, it's very easy to get into a "rabbit in the headlights" state of fear about it! May well be worth springing the accountant's fee - there are firms which specialise in doing straightforward returns.

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Lettings relief:

Lettings relief is worth the same as the figure calculated for private residence relief or £40,000, whichever is lower. So if you worked out that you would get £30,000 in private residence relief, you would also get £30,000 lettings relief. But if your private residence relief was £60,000, you would get only £40,000 lettings relief.

Oh yeah, rings a bell now :rolleyes:

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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