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Where Taxpayers and Advisers Meet

CGT or not ?

seymoreclearly
Posts:5
Joined:Wed Aug 06, 2008 3:22 pm

Postby seymoreclearly » Tue Mar 15, 2005 6:20 am

My solicitor thinks I'm liable to pay CGT, but is he right ?
In 1998 I inherited my parents bungalow. I pay full Council tax there. I have never owned, or had any financial interest in any other property. Most of the time, I actualy live, in a property owned by my partner, to whom I am not married, it is close to my work, the bungalow is not. I am usualy at the bungalow one weekend in three.
I am now selling the bungalow and there will be a capital gain of £90,000. Iv'e read up on the allowances,should I have to pay, but cannot make out whether or not the gain would be exempt CGT as proceeding from the sale of my 'Main Home'?
Can anyone help ?

robertmlaws
Posts:100
Joined:Wed Aug 06, 2008 3:10 pm

Postby robertmlaws » Tue Mar 15, 2005 7:37 am

I am not a lawyer but I am in a similar situation.

The question is: has the bungalow been your primary residence during the time you owned it? You say you paid Council Tax there, andthat is useful. But are you registered to vote at that address? Do you keep most of your stuff there? Do the tax office have it as your correspondence address? Has nobody besides you lived there?

I believe it is OK to spend a lot of time away from the bungalow but it does need to have been your main base.

If you decide that it is your PPR then I don't see that you need to even tell the revenue about its sale.


Robert
not a lawyer

seymoreclearly
Posts:5
Joined:Wed Aug 06, 2008 3:22 pm

Postby seymoreclearly » Tue Mar 15, 2005 7:51 am

Hi Robert.
Thanks for answering. My answers are all yes to those questions, so I suppose I would be OK. Probably best to get profesional advice I'm beginning to think though. Don't want some eager tax inspector coming down like a ton of bricks a couple of years after the event!
Thanks again.
Dave

Instinctive
Posts:1797
Joined:Wed Aug 06, 2008 3:15 pm

Postby Instinctive » Tue Mar 15, 2005 2:06 pm

It does seem that it has been your main residence. It would have been preferrable to have nominated it as a main residence within the 2 years time limit to put the issue beyond any doubt. In the absence of an election, the issue is decided on the actual facts of each case.

If we accept that it has been your main residence as a matter of fact, you could let it if you wish for at least 3 years, probably more, and still not be liable for any CGT. This is because final 3 years ownership of a property used as an only or main residence is exempted and you also get lettings relief of upto £40,000 to set off against any chargeable gains in respect of lettings etc exceeding 3 years.

So, you don't have to sell because of CGT.

Ramnik
ramnikrp@hotmail.com

seymoreclearly
Posts:5
Joined:Wed Aug 06, 2008 3:22 pm

Postby seymoreclearly » Wed Mar 16, 2005 2:51 am

Hi Ramnik
Thanks for your reply. It has never been let. I am not selling because of CGT, but mainly because of the distance of the propery from my work. I have to admit that iv'e not done so in the past, mainly for sentimental attachment reasons.
Regards
Dave

seymoreclearly
Posts:5
Joined:Wed Aug 06, 2008 3:22 pm

Postby seymoreclearly » Thu Mar 17, 2005 4:42 am

Another question has arisen. IF I do have to pay CGT on this house sale, I would rather pay it in the 2005/2006 financial year that in this. Does anyone know what the 'Tax date' for the purpose of applying CGT is, i.e. completion, contract signing, the actual receipt of proceeds, or what ?

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Thu Mar 17, 2005 6:58 am

I would agree. You seem to have a good case for the property you own to be your main residence. If it continues to remain your main residence, it will be exempt from CGT under current legislation.

Your circumstances may enable you to make a Late Nomination claim, in accordance with the Extra Statutory Concession D21.

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Thu Mar 17, 2005 7:00 am

Normally, it is the date of Exchange of Contracts which triggers the CGT point.

Unless the disposal is conditional - in which case, it is the date when the condition is fulfilled.

seymoreclearly
Posts:5
Joined:Wed Aug 06, 2008 3:22 pm

Postby seymoreclearly » Thu Mar 17, 2005 7:40 am

Thanks King_Maker.
Do you think it would be advisable to get a tax professional to argue the case for me? Or should I just put the facts before the tax man?

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Thu Mar 17, 2005 9:37 am

Firstly, if there are no adverse consequences, a sale on/after 6 April 2005 will delay the tax payment (assuming that some is payable) until 31 January 2007 - which may be an extra 12 months.

If you are confident that you are fully exempt from CGT and are happy dealing with any questions that the IR may ask, then I see no need to engage anyone to deal with the matter for you. However, you would like the possible extra "comfort" factor, then seeking professional advice could be useful option.

Note that the extended 2 year Time Limit under ESC D21 may be deemed to have started today.


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