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Where Taxpayers and Advisers Meet

CGT on residential home

Workaway
Posts: 3
Joined: Mon Sep 02, 2019 4:00 pm

CGT on residential home

Postby Workaway » Mon Sep 02, 2019 4:10 pm

Hi,
I have let out my house whilst I was working abroad.
I understand that these years earn relief, i.e. will not be counted in the calculation for capital gain when I sell - as long as I move back into the house before selling.
Essentially I have owned the property for 27 years and rented it out for 6.
I am currently renting the property and will return to be resident in summer 2020.

Many thanks for any replies and advice

Jholm
Posts: 107
Joined: Mon Mar 11, 2019 4:22 pm

Re: CGT on residential home

Postby Jholm » Tue Sep 03, 2019 8:21 am

Not 100% sure what your question is as there isn't one!

Research the following reliefs for CGT:

PPR Relief (actual and deemed occupancy)

Lettings Relief

Workaway
Posts: 3
Joined: Mon Sep 02, 2019 4:00 pm

Re: CGT on residential home

Postby Workaway » Tue Sep 03, 2019 1:01 pm

Hi,
Basically I want to know if I could be liable for CGT, when I sell.
I have researched PPR and Lettings relief etc which are as usual not clear and in some cases ambiguous.

Then, I found a page on HMRC gov.uk website, which states
"If you have one home or you nominated your home

You get relief if you were away from it for:

any reason for periods adding up to 3 years
up to 4 years if you had to live away from home in the UK for work
any period if you were working outside the UK"


This seems to indicate that moving abroad for employment will mean that these years are do not come into the CGT calculation. Though it is not clear if this applies if the house was rented out.

I am also aware that there are possible changes to the lettings relief in 2020.

Any information to clarify this would be very much appreciated.

pawncob
Posts: 4447
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: CGT on residential home

Postby pawncob » Wed Sep 04, 2019 10:31 am

Yes you're liable to CGT on the sale, but full relief for PPR and letting while absent.
HMRCs advice is (as usual) pretty bad.https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2019
With a pinch of salt take what I say, but don't exceed your RDA

Workaway
Posts: 3
Joined: Mon Sep 02, 2019 4:00 pm

Re: CGT on residential home

Postby Workaway » Thu Sep 05, 2019 4:24 pm

Many thanks for replies.
If anyone else has any other information, I would still appreciate it as I attempt to pass through this minefield.

bd6759
Posts: 3110
Joined: Sat Feb 01, 2014 3:26 pm

Re: CGT on residential home

Postby bd6759 » Sat Sep 07, 2019 11:19 am

IF you are working abroad, that is a period of "deemed residence". If the law says you are deemed to be living there, it does not matter if it was let or not: you are deemed to be there, therefore it counts as an exempt period for CGT.

Lambs
Posts: 1437
Joined: Wed Aug 06, 2008 3:15 pm

Re: CGT on residential home

Postby Lambs » Mon Oct 07, 2019 9:24 am

W, you are right to be concerned about access to the UK PPR.

Fundamentally, periods of absence from one's only or main residence only 'count' towards the relief during periods in which there is NO OTHER PROPERTY that is also eligible for the relief (TCGA 1992 s 223 (7)).

If you have lived away from that property for anywhere between 6 and 30 years, it seems highly unlikely that you will not have gained sufficient interest in another residence - potentially anywhere in the world - during that time that the permitted periods of absence regime will apply without restriction.

Note by reference to

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65047

that HMRC's interpretation (with some justification) requires merely that there be another residence that is eligible for relief looking only at ss 222 - 6 in isolation. In other words, it is quite likely that your current (overseas) residence is eligible, and your UK (former) residence is not - unless you nominated your UK former residence up to c30 years ago, etc., etc.

Furthermore, the government intends to restrict the utility of lettings relief drastically, from 6 April 2020. On my initial reading of the draft legislation, it appears to curtail the availability of the relief, including in relation to its use/letting prior to the start date of the revised legislation. Certainly, based on the government's summary of responses to the consultation on the changes to PPR / ancillary reliefs, this appears to be the government's understanding of the draft legislation as well.

If the gain is significant, then I strongly recommend you seek the advice of a qualified professional and quickly, in case there is significant tax advantage to disposing of the property prior to 6 April 2020.

With regards,

Lambs


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