Moving into previously rented flat

spyder · Postby **spyder** » Wed Feb 22, 2006 4:41 am

I asked about CGT yesterday (Shall I get an accountant). If my flat I rent out is vacated and I move into it, do I have to live there for a certain period and can this exempt me from CGT? Thanks again

Andy Wood. · Postby **Andy Wood.** » Wed Feb 22, 2006 9:22 am

Spyder,

The extent to which the main residence exemption will apply will depend on whether you occupied the property before you let it out.

Usually, the last three years of ownersip will be exempt from CGT where it has been your main residence.

Whether a property has been your main residence is down to the quality of occupation rather than the quality.

I presume you've been declaring your rental income (Income less expenses is taxable) while the property has been let?

Hope this helps
Cheers

Andy Wood
Chartered Tax Adviser

awood@clbcoopers.co.uk
01204 551124

King_Maker · Postby **King_Maker** » Wed Feb 22, 2006 9:46 am

Yes, if your period of occupation amounts to residence.

Unfortunately, the legislation does not provide for any minimum period of occupation to qualify for Main Residence Exemption. The Courts have stated that it is "quality not quantity" that is important.

IMHO, the IR are unlikely to challenge the exemption if you have lived in the property for over 1 year - 3 months is likely to be too short, although it would depend on the circumstances.

Have you read the Inland Revenue's Help Sheet IR283 which deals with CGT for private residences?

It is downloadable from their website.

http://www.hmrc.gov.uk/leaflets/menu.htm

[CAVEAT : see Matthew Hutton's article of August 2005 where Lettings Relief falls within last 3 years of ownership :

http://www.taxationweb.co.uk/articles/a ... php?id=215