the 3 YEAR RULE concerning owning 2 houses

[bazil]

If I have owned a house 20 years and wish to buy another and maybe move into it or sell it.
What is the so called "3 year rule" ? and how is it best used to my advantage.

[accountant@uktaxshop]

Bazil,

So long as you havenÂ’t rented this house out during the period there should be no CGT to pay on the sale.

The "3 year rule" mentioned on this board in connection with property sales, simply means that once a house has been your main residence, the final 3 years are treated as if it was your main residence, even if this wasnÂ’t actually the case.

So in your circumstances (assuming you had the funds) you could buy another house, let your current house for up to 3 years, and still pay no CGT on its sale. Of course you would be liable for icome taxes on your rental income.

I hope this is of use to you.

Regards

James Smith
Chartered Accountant
www.uktaxshop.co.uk
01284 764436

[bazil]

Thanks for your reply,

In other words, I can buy another house as long as I sell my first house within 3 years, I am in the clear of capital gains,

Is the 3 years from registed ownership to sale contract date, I suppose someone pulling out of a sale affects this ?

I may not wish to rent the first house out emmidiatly or at all,does this make any difference?

I assume, council tax and bills would be still in my name although not living in my origional house, but as it is still owned by me I would be fully resposibe for these.?

Thanks for any help on this.