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Where Taxpayers and Advisers Meet

Capital Gains on Buy to Let if lived in?

Llamalegs
Posts:3
Joined:Thu Jul 20, 2017 12:04 am
Capital Gains on Buy to Let if lived in?

Postby Llamalegs » Thu Jul 20, 2017 12:16 am

Wonder if anyone can help?

I have a home that I have lived in for 20 years. I also have a buy to let flat which has always been rented out (for 12 years) and have declared this income on tax returns.

I am planning to sell my home. If I move into the buy to let flat for approx 6 months, whilst looking for a new home, then sell the buy to let will I still have to pay capital gains tax on the buy to let as i would have lived in it?

Thanks

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Capital Gains on Buy to Let if lived in?

Postby bd6759 » Thu Jul 20, 2017 11:26 am

Yes, there will still be a CGT liability on the BTL flat.

Llamalegs
Posts:3
Joined:Thu Jul 20, 2017 12:04 am

Re: Capital Gains on Buy to Let if lived in?

Postby Llamalegs » Fri Jul 21, 2017 9:53 am

Thanks for the response. Is there a CGT liability regardless of how long I live in the Buy to Let flat?

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Capital Gains on Buy to Let if lived in?

Postby bd6759 » Fri Jul 21, 2017 10:06 am

You will need to live in it for 10 years to extinguish any CGT.

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Capital Gains on Buy to Let if lived in?

Postby darthblingbling » Thu Aug 03, 2017 11:42 am

The 12 years will always likely be liable to CGT as PPR would only cover the period in which you lived in the property plus an extra 18 months (so 10.5 years liable as a minimum maybe?)

There is no set minimum regarding how long you must reside in the property before PPR is allowed and HMRC would judge it on the facts. If it's only 6 months then I would probably say HMRC would see straight through this claim. There has to be clear intent to live in the property as your main residence, if they see the intent as a tax dodge then they'll likely reject.

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Capital Gains on Buy to Let if lived in?

Postby SteLacca » Thu Aug 03, 2017 1:29 pm

The tribunals have consistently rejected claims to private residence relief where there is not a sufficient quality of occupation and permanence.

Since you admit that you would live there only whilst looking for somewhere else, if HMRC were to challenge the claim and it ended up at tribunal I have a hunch you'd lose and the whole of the gain would be taxable.

Llamalegs
Posts:3
Joined:Thu Jul 20, 2017 12:04 am

Re: Capital Gains on Buy to Let if lived in?

Postby Llamalegs » Thu Aug 03, 2017 1:33 pm

Ok thanks everyone. That is very clear. Thank you.


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