capital gains tax

[gordsky42]

hi, hoping someone can help here

we lived in our main home since 2000 and in 2013 we were fortunate enough to be able to purchase a second property which we them rented out.

unfortunately in December due to personal/financial circumstances we had to sell our main residence and move into the smaller more affordable property we previously rented out.

now much to our distress we have been forced to sell this property too and to add further to our situation have been advised we may be liable for capital gains tax on the property as it was rented out.

can someone advise if we would qualify for any relief? having looked online briefly I have seed principal residence relief and letting relief mentioned but don't know if we qualify for either of them. we have lived in the property for 5 months now and at the moment we can't really afford to pay for advice if we don't qualify but if we could get an indication if we do we would find the money somehow.

hoping someone can point us in the right direction....

[pawncob]

https://www.gov.uk/tax-sell-home

[someone]

This is going to be a quality of occupation question. If you moved in with the intention of it being your permanent home and then changed circumstances are now forcing you to sell then you'll probably qualify for PPR and RLR. If, on the other hand, it was to be expected that this was temporary occupation before sale then you probably wont.

If you get PPR and RLR then you will have a greatly reduced CGT bill. You will get the last 18 months as PPR and probably an equivalent amount for RLR. So you would then pay CGT on around 1/4 of the gain.

Assuming that you own the property jointly then there is a roughly 20K CGT allowance available. You would need to give accurate figures (purchase date and price, sale date and price) for anybody to work out how much CGT you might pay in either case.

[JOHNRE]

"Someone"......are you saying that he can claim lettings relief even though he had never lived in the property before renting it out?

[someone]

He is saying he bought an investment property in 2013. At that point no PPR or RLR would be available.

He then moved in to that property in December 2016 when it was his only home (the other home having being sold)

In theory, this home is his only and main residence and therefore eligible for PPR (for 18 months) and RLR. However, HMRC are likely to look to the quality of the occupation - did he move in with the intention of it being his permanent home and then changed circumstances forced a sale. Or was it obvious from the point of occupation that this was temporary and that the sale was inevitable, in which case I think HMRC would reject a claim for PPR and RLR. (As far as I'm aware, RLR applies if there's PPR available. The occupation doesn't have to come before the letting, it can come afterwards.)

There have been cases quoted here where very sort periods of occupation have counted to qualify for PPR. But others where more substantial periods haven't qualified. In the OPs favour, this is his only home. But to his detriment, this could look like an attempt to try to get a short period of occupation prior to sale to trigger various tax reliefs and there was never any intention of it being a permanent home.

[maths]

The main issue is the reason why after a few months it has become necessary to sell the previously rented property. Assuming it qualifies as a residence (which i suspect is likely) then lettings relief is available even though the renting occurred pre personal occupation.