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Where Taxpayers and Advisers Meet

CGT whilst member of HM Forces

michaelhope026
Posts: 4
Joined: Tue Jan 15, 2019 11:11 am

CGT whilst member of HM Forces

Postby michaelhope026 » Tue Jan 15, 2019 11:29 am

I am after some advice with regards to Capital Gains Tax (CGT) on the potential sale of my private property. I am a member of HM Forces who, with my wife, purchased a residential property in Jun 15 for £207,000. The property was purchased with a view to living in it, however being in the military I/we were unable to live in it as my employer requires me to live where I work. As such they provide Service Families Accommodation (SFA). From Aug 15 we have therefore privately rented our property as we couldn't live there as a result of my job. Yesterday we had the property valued at between £300,000 to £325,000. Whilst we always intended to live in the property, the potential profit to be made appears too good to miss out on. We are trying to work out if we would qualify for private residence relief for the purposes of CGT as a result of my being in HM Forces/job related accommodation.

Any advice or assistance would be greatly appreciated.

AGoodman
Posts: 808
Joined: Fri May 16, 2014 3:47 pm

Re: CGT whilst member of HM Forces

Postby AGoodman » Tue Jan 15, 2019 2:44 pm

You should be okay. See s.222(8) below:


(8) If at any time during an individual's period of ownership of a dwelling-house or part of a dwelling-house he—
(a) resides in living accommodation which is for him job-related …2, and
(b) intends in due course to occupy the dwelling-house or part of a dwelling-house as his only or main residence,
this section and sections 223 to 226 shall apply as if the dwelling-house or part of a dwelling-house were at that time occupied by him as a residence.

Armed Services accommodation should count for this.

The only lacunae I could think of is that of intent. To have had the necessary intent, I should think that, when you bought it, there must have been a reasonable possibility that you would live there. You should be prepared to explain how/when you thought you would live there if you were already in services accommodation or expecting to move into it. The may be as simple as a change of circumstances or that you expected to live there after a period away.

michaelhope026
Posts: 4
Joined: Tue Jan 15, 2019 11:11 am

Re: CGT whilst member of HM Forces

Postby michaelhope026 » Tue Jan 15, 2019 3:23 pm

Thanks for the reply, its most appreciated. Given that myself and my wife own the property 50-50, it would be interesting to gage if tax relief would extend to her 50% too? This is given by the fact the first year (Jun 15 - Jul 16) she was also in HM Forces, and thereafter she has accompanied me at my assigned location which is not within a commutable distant from our private property.

wamstax
Posts: 1868
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: CGT whilst member of HM Forces

Postby wamstax » Tue Jan 15, 2019 5:31 pm

SSections 222 (8A) to (8D) set out that living accommodation is job related if,

it is provided by reason of the individual’s employment, or by reason of the employment of the individual’s spouse or civil partner,
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website

michaelhope026
Posts: 4
Joined: Tue Jan 15, 2019 11:11 am

Re: CGT whilst member of HM Forces

Postby michaelhope026 » Wed Jan 16, 2019 12:53 pm

Thanks both for the reassurances on this. Apologies as I'm very much a lay man on this! With the facts in mind above, would anybody like to make an estimate of what CGT I would actually have to pay based upon a sale price of £300,000 from the original purchase price of £207,000?

wamstax
Posts: 1868
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: CGT whilst member of HM Forces

Postby wamstax » Wed Jan 16, 2019 1:35 pm

Answer is NIL if you had no other property in respect of which you concurrently claimed MRR
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website

bd6759
Posts: 3090
Joined: Sat Feb 01, 2014 3:26 pm

Re: CGT whilst member of HM Forces

Postby bd6759 » Wed Jan 16, 2019 5:39 pm

How did the property manage to increase in value by so much?

michaelhope026
Posts: 4
Joined: Tue Jan 15, 2019 11:11 am

Re: CGT whilst member of HM Forces

Postby michaelhope026 » Thu Jan 17, 2019 10:51 am

The property is in Bath. It is just a valuation at this time so might not sell for that amount. However property values in this area have continued to increase over the years above the national average I believe.

Thank you for your points above.


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