Rollover Relief paying off mortgage on holiday letting

[gatkinson]

We are selling our guest house that results in a captial gain of £82k, we also own a holiday cottage that we run as a holiday lettings business that has a mortgage on it of £125k. Can we use the £82k to pay off part of the mortgage and claim rollower relief from a capital gains perspective ?. In reality we need the £82k now to buy a house to live in, but within 3 years we should be able to get the £82k together again and I believe you have 3 years for rollover relief, would it matter that the money is actually initially used for another purpose (buying main home), or would it only be allowable if we physically had to keep the £82k in a bank for 3 years until we paid off part of the mortgage on the holiday cottage ?

[JS123]

Rollover relief applies when you buy another asset, not when you redeem a loan on it such as a mortgage.

If you bought the cottage in the period 12 months before to 3 years after realising the gain on your business then the gain can be rolled over into the purchase assuming the property qualified as furnished holiday lettings at the time - and bear in mind that the rules regarding these have just changed in the recent budget.

If you did not buy in this time scale, you cannot roll over.