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Where Taxpayers and Advisers Meet

Sell house after 8 months ownership

Gomo1974
Posts:5
Joined:Wed Aug 05, 2020 7:48 pm
Sell house after 8 months ownership

Postby Gomo1974 » Wed Aug 05, 2020 8:12 pm

I bought my 3 bed house in January 20 for £520k which required complete refurbishment.

Shortly after purchasing I and my parents decided they would move in, so i decided to build into the loft and have a single story rear extension.

The works are now complete, but during the lockdown my parents decided they dont want to move in as they want to be close to their GP, high street etc.

The additional extensions and considerable work I did myself have increased the value estate agents have Said. The house is now worth £700k so I would have made a gain of £100k.

As I have only lived in the property for 8 months is that going to be a problem when I attempt to sell and would I have to pay CGT ?

Also I bought with a mortgage.

Thanks

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Sell house after 8 months ownership

Postby bd6759 » Thu Aug 06, 2020 7:56 pm

Why are you selling?

wamstax
Posts:2019
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: Sell house after 8 months ownership

Postby wamstax » Thu Aug 06, 2020 8:15 pm

It is all a question as to whether you moved in to the property and established it as your main home with the necessary degree of permanence and quality of occupying your property as your main residence. While 8 months might seem a short period and point to the property not being occupied as your main residence but your development adventure. Clearly you will have to decide whether you return a capital gain (and whether exempt or chargeable ) or an adventure in the nature of trade in any tax return that you will require to complete after the disposal and it will all depend on the complete picture as to what or why HMRC might challenge your decision and potentially have reaped a profit from the disposal that was an adventure in the nature of trade and liable to income tax at higher rates and Class 4 NIC.
You can expect HMRC to be quite intrusive and searching if they think that you have manufactured a main residence disposal when especially the gain of over £100K has come from nothing more than the alterations or improvements to the property in a short period.
You might find the Tribunal case of Hashmi You can find the text at the following link

https://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKFTT/TC/2020/TC07715.html&query=(Aqeela)+AND+(Hashmi).

If you think you have a justifiable case for any gain being exempt then I would suggest that you engage with a tax adviser who is capable of dealing with such matters to your benefit as arguing such a situation with HMRC can backfire on the layman without professional advice.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

Gomo1974
Posts:5
Joined:Wed Aug 05, 2020 7:48 pm

Re: Sell house after 8 months ownership

Postby Gomo1974 » Fri Aug 07, 2020 1:59 pm

Hi,

Thanks for your reply and the case link. The case certainly looked as though the applicants were engaged in CGT avoidance.

In the past 10 years I have lived in two other properties with this Being my third.

Unlike the applicants I can prove this is my permanent residence by way of bank statements, utility bills, council tax, various deliveries.

On reflection perhaps I will wait until the new year, by which time it will have been 12 months of ownership and further evidence.

Any further comment will be appreciated.

Thanks again.


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