cold feet and CGT

[Franja]

I do hope someone can shed some light on this for me. My husband and I own a flat which is let in the south east which we have had for a year and a half. We have recently bought a new build property in the north west which we were either going to keep for our main residence or let until we needed it. He is currently working in the middle east and I am living with my parents until I join him. The new property is not quite finished. Since we bought it a few months ago its' value has increased by around 50K. We are now getting cold feet about being tied to this property in the UK and wish to sell. There is still work to be done i.e. floors carpets and light fittings.

a)Does this count as our main residence even though we don't live in it.
b)Is it better to try to sell is befere finishing the floors etc. to prove that we weren't trying to just make a quick profit, i.e. we haven't "renovated" it?
C)If we did finish the house would the cost of carpets and floors be offset against CGT
d)Are we liable for more tax because we have owned it for less than 2 years.
e)Would we be better sitting tight and either letting it or just keeping it empty and selling in 2 years?

[funcrusherbill]

As an amateur, I'd say this is difficult to answer without more details, which is probably why none of the usual suspects have responded!

Firstly, you don't say whether you ever lived in the flat, or just purchased and let it to tenants.

Secondly, the usual rule is that things fixed to the structure of the house are part of the house, and things you can move and take with you are not. I'd say wood laminate floors are fixed and capets are not. So any CGT would exclude carpet costs: but your solicitor can treat these as a separate item when sold so you won't lose out.

Generally you have to live in a house before you can claim CGT exemption as a private residence, though its worth checking on special tax relief if you are forced to work abroad by your employmer. Look at the Inland Revenue web site.

Finally, once both of you are abroad for a while,and stay away for five years, you will probably be exempt from CGT anyway (but not income tax on rents) Its very complicated though, and you need to consult a specialist accountant before you do anything.

If you or your husband are not British by birth it could be a lot more complicated!