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Where Taxpayers and Advisers Meet

CGT on rented property returning expat

Joined:Thu Feb 18, 2021 11:53 pm
CGT on rented property returning expat

Postby greenmark » Fri Feb 19, 2021 12:13 am

Hi All

I've a property that I've owned that has gained in value while as an expat. I want to work out when I return if it would be better to sell the home before I return and then pay CGT, or if it would be better for me to return to the home as my main residence and then sell it.

Story is
- bought the home for about £200k in 2003 and used it as my main residence.
- moved abroad in 2005 and have let out the home since.
- plan to move back to UK in Feb or March 2022.
- in January 2015 I had an estimate from an estate agent for the sale price of £500k. It was not a surveyor's valuation.
- currently similar homes in the area are now going for about £550k.

The property is the only home I have ever owned.

I know that if I sell the home while still living abroad, I need to pay CGT on any gains since April 2015. The HMRC website has a handy CGT calculator for that and gives two options - the CGT since valuation made in 2015, or a pro-rata CGT based from 2003 to the date of sale.
Obviously the CGT on a valuation would be much lower if the estate agent's estimate was correct and could be accepted. For the second option the website calculates I need to pay about £30k in tax.

So am wondering what might be the options for minimising tax when I return.
- would I be able to use the estate agent's estimate as the valuation for calculating the tax, or would I have needed a proper surveyor's valuation at the time?
- if I were to return to the UK and make the property as my main residence, how would that affect my tax burden? Would I need to pay CGT at all or only for the time I was not letting out the property? And for how long would I need to live in the property for it to be considered my main residence?

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