Two houses sold but what capital gains tax

[sebastian_head@hotma]

I bought my first house in August 1997, just after I started my first job, in Cambridge. I sold this house six months ago making a total gain of £55,000. I was forced to move away from this house in March 2000 because there was no more work available in Cambridge and so I moved to another job in the Isle of Man for 18 months. I then transferred to an office in Bradford where I lived for another 18 months until the date I sold my first house. I rented this property out from March 2000 to May 2003 to make some money while it stood empty.

I didnt like the quality of rental accommodation in Bradford and bought another house. I am still living in this house but im in the middle of conveyancing to sell. I am planning on moving abroad in a few months time. If the sale goes through as expected I will have gained about £15,000.

Is is possible that I will have capital gains to pay on either property? What do I need to say to the Inland Revenue when I complete my tax return?

many thanks, in advance, for any advise you give

[accountant@uktaxshop]

Sebastian,

It is quite possible that there is little or any gain arising from the sale of your house in Cambridge.

This is due to the fact this was once your main residence, and you have sold it three years from moving out. There is a rather handy exemption which enables the last three years of ownership to be treated as if you still lived in the property, and therefore qualify for an exemption for the final 3 years, plus the time you lived in the property. Any remaining gain should be soaked up by lettings relief and you personal allowance.

Regarding the second property you currently live in - this should be exempt in any case as this is your main residence.

In terms of reporting the disposals, the sale of your Cambridge property in May 2003 means you need to report it in your 2003/4 tax return along with your rental income. ( I assume you are declaring you rentals)

If you need some help confirming there is/isnÂ’t any gain arising and with filling in your returns please let me know. I may also be able to assist you obtaining any tax rebates due on your departure from the country if applicable.

Regards

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