CGT implications after relocating for work

[Joe.S]

Hello!

I've relocated within the UK for work and decided to rent while I get acquainted with the new area. In the meantime, I've put my only home, which I've lived in continuously since 2018, on the market. Will there be any CGT owed on the sale?

Any help gratefully received.

[darthblingbling]

If sold within 9 months of you moving out, no based on the background provided.

Even if longer than 9 months there are some deemed occupancy rules where you are unable to return to your home as a result of relocating for work.

You're probably fine.

[Jholm]

Deemed occupation rules to be aware of (periods you can treat as if you lived there):

- Can claim up to 4y when the reason is working elsewhere in the UK;
- Can claim up to 3y for any other reason

You could therefore have 7y 'vacancy' before the gain comes into charge. HOWEVER YOU MUST REOCCUPY THE PROPERTY FOLLOWING A PERIOD OF ABSENCE FOR THE DEEMED OCCUPATION RULES TO APPLY.

[Jholm]

Although as darth states, there are sometimes exemptions when you are unable to return. Choosing to sell does not equate to being unable to return though.

[Joe.S]

Thank you both for the helpful information. So, the general consensus appears to be, as long as the house is sold within the 9 months, I'm in the clear for CGT?

One last follow-up question. Do I need to make HMRC aware of my situation, ahead of the sale? I'm reading advice online about nominating the property that you own in order to secure main residence relief on it, even if you happen to be absent from it at the time.

[bd6759]

You only have one residence, so no nomination possible.

Nothing to tell HMRC until you sell. If there is no taxable gain, there is nothing to tell.

[someone]

You only have one residence, so no nomination possible.

Doesn't that depend on whether the house is still furnished as a home?

If the OP has moved into fully furnished rented accommodation and has left their home furnished as a second home then I think it could count as a residence even now. The fact that they're selling it doesn't stop it being a residence.

OTOH, if the house is completely empty then it's not a residence.

But I think the OP doesn't need to make an election as they don't have a major interest in their rented home.

The OP also needs to let the council know the situation, whether this is a second home or an empty property. There can be different rates of council tax for the different cases which also depend on the council.
https://www.gov.uk/council-tax/second-homes-and-empty-properties

FTAOD, main home in council tax terms is always decided "on the facts" and a CGT nomination has no effect on it.

[pawncob]

AS bd6759 says, no nomination is possible.

[Joe.S]

AS bd6759 says, no nomination is possible.

OK, thanks for the clarification.

I got myself confused after reading the following on a different site.

The above rules only treat the property as being occupied as a residence – not necessarily as a main residence. Therefore, if you have another residence during the period (whether owned or rented) and you wish to secure main residence relief on the property from which you are absent, it is recommended to make a nomination to HMRC confirming that you wish to treat that property as your main residence during the period. If you do not make such a nomination, the question of which property was your main residence will be decided on the facts.

https://www.litrg.org.uk/savings-property/capital-gains-tax/selling-your-home#5

[someone]

AS bd6759 says, no nomination is possible.

OK, thanks for the clarification.

I got myself confused after reading the following on a different site.

The above rules only treat the property as being occupied as a residence – not necessarily as a main residence. Therefore, if you have another residence during the period (whether owned or rented) and you wish to secure main residence relief on the property from which you are absent, it is recommended to make a nomination to HMRC confirming that you wish to treat that property as your main residence during the period. If you do not make such a nomination, the question of which property was your main residence will be decided on the facts.

https://www.litrg.org.uk/savings-property/capital-gains-tax/selling-your-home#5

I don't know the answer to this - but it doesn't really matter any more although it used to be important:

https://www.legislation.gov.uk/ukpga/1992/12/section/222 (Make sure you look at the latest version, not the original version)

F5(5A)But a notice or further notice under subsection (5)(a) determining which of 2 or more residences is an individual’s main residence for any period may be given more than 2 years from the beginning of the period if during the period the individual has not held an interest of more than a negligible market value in more than one of the residences.

So in your case, if both properties are residences, then you can backdate an election as long as is necessary.

I think the problem is that your second home might not be a residence. See this article:
https://www.markmclaughlin.co.uk/main-residence-election-is-the-property-a-residence/

The problem is that there's no statutory definition of residence therefore to be sure you will either have to find a case with conditions similar enough to your own to rely on or, should you need to claim PPR for more than 9 months after you moved, wait to see if HMRC objects and then appeal.

The sort of case I'd look for would be one where someone had two residences (undisputed), they decided to sell the one that they'd made a main residence election for but it took a long time to sell. Did HMRC try to disallow PPR for the period it was being marketed on the grounds that it wasn't a residence any more? I think there's a vast difference between continuing to be a residence after quality of occupation changes, and becoming a residence originally but I don't know whether that's ever been taken to tribunal. Once a property is a residence the quality of the occupation doesn't matter for PPR election purposes.

FWIW, when I was in a somewhat similar situation, my buildings insurance required the property to be visited *every* week (it was was more onerous than if it had been a main home - missing a week due to being on holiday wasn't allowed) although I wasn't looking to make the property my main residence for CGT purposes so it's not directly comparable but that would seem to strengthen the claim to be a residence. I sold it after the then 18 months and I squeaked in under the CGT allowance once the PRR apportioning was done.