Sale of rented property 3 year rule complication

[geraint]

Could somebody please clarify the following position:

1988 Bought flat (no.1) in london and lived in it until march 2001, then moved back to Wales and lived with my mother. Rented flat out to tenants since then.

Feb 2001 bought second flat in London as an investment (same block as flat number 1). Never lived in this one.

September 2001 bought house in Wales and lived in it from May 2002. My question is when does the 3 year rule finish? Technically I did not have a principal residence during the period March - September 2001. Does the 3 year rule end in March 2004 or September 2004 or May 2005?

The value in 1988 was £53,000 and value now is £180,000. Assuming no further growth in value during the next 2 years, should I sell now to avoid CGT. Would there be much CGT in two years?

Thanks

Geraint

[Ian McTernan CTA]

The three year rule applies to the last 36 months of ownership, so it depends on when you sell it as to the end date.

Ian McTernan CTA
McTernan Associates Ltd
Chartered Tax Advisers
ian@imcternan.com