Landlords Selling Up

[eurows]

My landlords selling up and has offered me the house on first refusal. He lived in the house prior to renting me it 18 months ago.

He has just been talking to his solicitors and they informed him that there is a 15% chance that the Inland Revenue might chase his for CGT.

He was really surprised as he thought he has 3 years grace.

Solicitor says Gordon is clamping down and trying to close the loophole. If he had a BTL mortgage they may come after him.

Anybody heard anything similar. I did belief he had 3 years. GOOD OL GORDY.

[gilf]

My landlords selling up and has offered me the house on first refusal. He lived in the house prior to renting me it 18 months ago.

He has just been talking to his solicitors and they informed him that there is a 15% chance that the Inland Revenue might chase his for CGT.

He was really surprised as he thought he has 3 years grace.

Solicitor says Gordon is clamping down and trying to close the loophole. If he had a BTL mortgage they may come after him.

Anybody heard anything similar. I did belief he had 3 years. GOOD OL GORDY.

I have never heard anything about 3 years grace, but if there was such I thing I would imagine it would have been on second/holiday homes rather than properties that have been used for BTL.

But like I say I don't know nuffin, so just ignore me

Edited March 7, 2007 by gilf

[Marcos Scriven]

I contacted the HMR&C about this issue - and I was informed that, as long as you had lived in the place as your main home before, then you can rent it out without CGT for three years.

[Minos]

My landlords selling up and has offered me the house on first refusal. He lived in the house prior to renting me it 18 months ago.

He has just been talking to his solicitors and they informed him that there is a 15% chance that the Inland Revenue might chase his for CGT.

He was really surprised as he thought he has 3 years grace.

Solicitor says Gordon is clamping down and trying to close the loophole. If he had a BTL mortgage they may come after him.

Anybody heard anything similar. I did belief he had 3 years. GOOD OL GORDY.

I hope you enjoyed being the first to refuse

[housesforcourses]

I contacted the HMR&C about this issue - and I was informed that, as long as you had lived in the place as your main home before, then you can rent it out without CGT for three years.

I used to think that was the case to but my brother has been informed by his accountants that this is not the case (he was thinking of moving out of his house and renting it out. As a result now he's selling up).

[gfromls]

it always used to be that you had to live in the house for the 3 years (at least) prior to selling.

[miro2021]

I contacted the HMR&C about this issue - and I was informed that, as long as you had lived in the place as your main home before, then you can rent it out without CGT for three years.

I think you are right about this.

Unless things have changed recently...

http://www.thisismoney.co.uk/mortgages/art...mp;in_page_id=8

I think you also get up to 40K gain tax free on top of the 36 months if the property was let out.

e.g

"For example, Marianne is planning to sell her flat, which she purchased five years ago for £130,000. She lived in it for a year, before moving in with her partner and letting the property. Marianne and her partner are getting married and she aims to sell the flat for £230,000 to finance a move after the big day.

Mr Ford explains that the first year is exempt from capital gains, as it was her main residence, the final three years are also exempt, as the home was once her main residence, leaving only one year exposed. If it is assumed that capital gain is spread equally over the five years, the exposed sum is £20,000 and because this is lower than the £40,000 letting relief, no tax should be payable."

Edited March 7, 2007 by miro2021

[eurows]

I contacted the HMR&C about this issue - and I was informed that, as long as you had lived in the place as your main home before, then you can rent it out without CGT for three years.

I just rung my accountant who confirmed that there is a chance that you will have to pay CGT within the three years.

[sam]

I just rung my accountant who confirmed that there is a chance that you will have to pay CGT within the three years.

so still unsure then

[eurows]

so still unsure then

[miro2021]

I just rung my accountant who confirmed that there is a chance that you will have to pay CGT within the three years.

See IR helpsheet 283 - example 4 confirms the last 36 months of ownership are exempt on a property which was once your PPR.

[Warwick]

I just rung my accountant who confirmed that there is a chance that you will have to pay CGT within the three years.

He/she is wrong.

The 36 month rule is an absolute - there are no exceptions. The last 36 months of OWNERSHIP are always treated as exempt from CGT, provided the property has been a PPR at some stage. Also, Lettings Relief (max of £40,000 per owner) will be available if needed.

Refer him/her to HMRC's Helpsheet IR 283 :

http://www.hmrc.gov.uk/helpsheets/ir283.pdf

[chichi]

Tell him the less profit he makes the less CGT he'd have to pay and offer him LOW!

[29929BlackTuesday]

My landlords selling up and has offered me the house on first refusal. He lived in the house prior to renting me it 18 months ago.

He has just been talking to his solicitors and they informed him that there is a 15% chance that the Inland Revenue might chase his for CGT.

He was really surprised as he thought he has 3 years grace.

Solicitor says Gordon is clamping down and trying to close the loophole. If he had a BTL mortgage they may come after him.

Anybody heard anything similar. I did belief he had 3 years. GOOD OL GORDY.

Hey, with all this talk of the three year thing we're missing the point that you'll need to find somewhere new. Sorry this is happening to you - hope you find a decent gaff soon.

[eurows]

My accountant says it is being seen at the moment as a loophole. It was not meant for people with BTL mortgages.

This is why they say there is a 15% chance as they believe Gordon is going to close the loophole.

Maybe he will do it in the budget. Now there is a big chunk of money for the Chancellor.

Edited March 7, 2007 by eurows

[Guest d23]

My accountant says it is being seen at the moment as a loophole. It was not meant for people with BTL mortgages.

This is why they say there is a 15% chance as they believe Gordon is going to close the loophole.

Maybe he will do it in the budget. Now there is a big chunk of money for the Chancellor.

hmmmmm. I may be missing something but I'm not sure who it was meant for then; seems specific to people owning more than one property regardless of how it was paid for.

Or were people with enough money to buy 2nd / 3rd / 4th etc properties in cash the only ones supposed to get this beneficial tax break?

[Fence]

I contacted the HMR&C about this issue - and I was informed that, as long as you had lived in the place as your main home before, then you can rent it out without CGT for three years.

I believe you can only have one Principal Private Residence (PPR) at a time. You need to elect which property is your PPR for tax purposes against which you're exempt CGT. That offers some tax planning but I'm not aware you can avoid CGT on more than one property at a time. That is, you can claim it as your PPR for the last 36 months even if you did not live there but cannot also claim another property to be your PPR for the same period. I could be wrong and this does not constitute advice.

[Warwick]

A BTL can never qualify as a PPR, if it is always let out (except for job related accommodation).

However, if the LL were to live in the property for a significant length of time after the tenant(s) has moved out - (say) 12 months, that could be enough to trigger PPR exemption of at least 36 months (plus Lettings Relief etc).

[ALF]

I believe you can only have one Principal Private Residence (PPR) at a time. You need to elect which property is your PPR for tax purposes against which you're exempt CGT. That offers some tax planning but I'm not aware you can avoid CGT on more than one property at a time. That is, you can claim it as your PPR for the last 36 months even if you did not live there but cannot also claim another property to be your PPR for the same period. I could be wrong and this does not constitute advice.

That is correct you can only ever have one PPR at one time. However, it is possible to vary the election so therefore on buying a second property you could for instance elect the second as your PPR and move in for a short time probably necessary to be for 1 or 2 years before returning to the first property and re-electing it as you PPR. You should still get full exemption on your first property provided your period of absence is not more than 3 years (there is an exemption for any period of absence of up to 3 years for whatever reason provided you return to the property after the period of absence. This is in addition to the last 36months exemption) and your second property will get exemption for any gains in the last 3 years as it will have been your PPR at one stage. In addition, as the second property will have been your PPR at one stage you should also be able to claim letting relief in relation to any period when it has been let out (broadly, letting relief is the lower of 40k, your PPR or the gain in proportion to the period when the property was let). The above doesn't constitute advice and nobody should act on it before taking professional advice in relation to their specific circumstances.

[GCS15]

Maybe he will do it in the budget. Now there is a big chunk of money for the Chancellor.

Sweet - what with an adventure in Iran just around the corner the timing couldn't be better

[enworb]

The 3 year rule is not being amended any time soon. If it were I would have read about it on newsletters that I subscribe to.

Any accountants that are claiming otherwise are giving false information. Maybe they are hoping to represent worried LL's

I will be moving into my btl this year (not to evade cgt) because it was always my intention,. I will live there a minimum of 2 years - maybe more depending on the property market and/or whether the right property comes up for me to buy. I will be exempt from CTG because of the £40k lettings relief and the ratio of which it has been/not been my PPR (which will be a minimum of 50/50)..assuming the value doesn't inflate by 25% in the next 2 years.

Check out www.taxationweb.co.uk/forum

[miro2021]

That is, you can claim it as your PPR for the last 36 months even if you did not live there but cannot also claim another property to be your PPR for the same period. I could be wrong and this does not constitute advice.

You are not claiming it as your PPR for those 36 months, you are simply claiming exemption from CGT for the final 36 months of ownership of a property which was once your PPR.

[Orbital]

There was a thing on this in the S.Times a week or 2 ago. Had a list of ways to minimise CGT on property. For example, make sure its in joint names to get both of your 8.5k allowance, so you can get 17k tax free before worrying about anything else !

But it also said that there is no defined amount of time you have to be there atm before you can claim it as your primary residence, so in theory you could move move back in for a week. The article went on to say that in reality this may or may not be accepted, its a bit of a grey area.

There were a number of other things that could be done too, but I forget. Its not really relevant to me and im no accountant! How true it was I do not know, just reporting what I read! GL and happy tax dodging (not evasion of course!)

[enworb]

There was a thing on this in the S.Times a week or 2 ago. Had a list of ways to minimise CGT on property. For example, make sure its in joint names to get both of your 8.5k allowance, so you can get 17k tax free before worrying about anything else !

But it also said that there is no defined amount of time you have to be there atm before you can claim it as your primary residence, so in theory you could move move back in for a week. The article went on to say that in reality this may or may not be accepted, its a bit of a grey area.

There were a number of other things that could be done too, but I forget. Its not really relevant to me and im no accountant! How true it was I do not know, just reporting what I read! GL and happy tax dodging (not evasion of course!)

You are right. It is a grey area as to how long one should move into a btl in oerder to make themselves exempt.

It's supposed to be the quality and not the quantity that dictates whether or not it will be accepted that they are genuinly moving into it as a home rather than an investment.

I suppose the least that is expected would be that ALL bills are transferred to that address but I'm not sure how else quaility can be measured.

I will be living in my btl for a minimum of 2 years because I'm quite looking forward to it. It's far bigger than my PPR and could be bigger than the next house I buy...but it doesn't have a 3rd bedroom, a garage and freehold tenure.

[MarkG]

The 3 year rule is not being amended any time soon. If it were I would have read about it on newsletters that I subscribe to.

Trust Gordon. Gordon is your friend.