Black and white CGT answer?

[Kbabs76]

Hello all

I live in, and own a semi detached property. I'm in the fortunate position where I am buying the house next door.

The two obvious options open to me are to rent out next door, or turn the two houses into one - the latter being the long term goal.

I understand that if I convert the two houses in to a single property straight away, then I don't pay CGT. However, the question I am asking is this (and hypothetical)... If I rent out next door for 5 years, then, rather than sell it, I convert to 1 house, will I pay CGT or not? I understand that if I sell it after the rented period, I have made a gain, but by converting, technically I haven't.

Any opinion will be greatly received, although I am hoping there is a definite answer!

Best regards
Keith

[pawncob]

No CGT arises until you make a disposal. If you retain the property, there's no disposal. BUT get professional valuations whenever there's a change in the property so that any eventual gain can be calculated.

[Kbabs76]

Thank you for your reply.

So does this mean that I get a valuation of the property in 5 years time at the point I want to stop renting it out and turn into one house. I keep that valuation on record for when I decide to sell the (combined) house - then at that point I pay the CGT retrospectively for the 5 year period it was two house - or do you pay the CGT at the point of which it stops being 2 house?

Sorry so going over this, I just want to be crystal clear in my mind!

Thank you again.

[pawncob]

Any period when it isn't your PPR is chargeable. When you sell the gain will be time apportioned to determine how much is chargeable. You'll also get letting relief and an annual allowance.

[bd6759]

You do not pay CGT until you dispose of an asset. You will not pay any CGT for as long as you own it/them.

[Kbabs76]

Thank you once again for all your comments.

Is all building / refurbishment work during the second home period cgt deductible? I say this because there is quite a bit of work I need to budget for in order to make the house habitable.