Tiggy Posted March 4, 2008 Share Posted March 4, 2008 I have a house which has been let ou for over 10 years, I'm planning to sell it in the next year, I understand that I'm liable to 40% capital gains tax if i put the profit in the bank or buy another investment property. If I use the money to buy a home for myself do I still have to pay this? I heard that I possibly don't, does anyone out there know? I willget some professional advice but it helps if I have an idea of what I'm talking about Quote Link to comment Share on other sites More sharing options...
Egluntyne Posted March 4, 2008 Share Posted March 4, 2008 I think as long as this house is solely in your name, and the house you are in at the mo is solely in your OH's name, you should be OK. Quote Link to comment Share on other sites More sharing options...
Tessa the Duchess Posted March 4, 2008 Share Posted March 4, 2008 I think as long as this house is solely in your name, and the house you are in at the mo is solely in your OH's name, you should be OK. I believe this to be true too. You can get useful information about tax matters on the uk.gov website, suprisingly easy to read Tessa Quote Link to comment Share on other sites More sharing options...
Richard T Posted March 4, 2008 Share Posted March 4, 2008 I think as long as this house is solely in your name, and the house you are in at the mo is solely in your OH's name, you should be OK. I believe this to be true too. You can get useful information about tax matters on the uk.gov website, suprisingly easy to read Tessa I don't think that's right. According to direct.gov.uk, "If you are married or in a civil partnership and have two or more homes, both you and your spouse or civil partner must notify your own Tax Offices which of your homes is your main home for private residence relief purposes - and it has to be the same one." Quote Link to comment Share on other sites More sharing options...
Tiggy Posted March 4, 2008 Author Share Posted March 4, 2008 the house we live in is now in joint names & the other one in mine only, I can see that I'm going to need some professional advice Quote Link to comment Share on other sites More sharing options...
Nicola H Posted March 4, 2008 Share Posted March 4, 2008 Richard is right i am afraid it has to be your main house, do you have a child who is over 18 you could put it in their name I know a friend who has got round it this way. I have always had to pay capital gains tax on the properties i have renovated............It seems very unfair after all the hard work you have put in, I would seek advice as there may be ways that you can off set some of it. Quote Link to comment Share on other sites More sharing options...
Tessa the Duchess Posted March 4, 2008 Share Posted March 4, 2008 I don't think that's right. According to direct.gov.uk, "If you are married or in a civil partnership and have two or more homes, both you and your spouse or civil partner must notify your own Tax Offices which of your homes is your main home for private residence relief purposes - and it has to be the same one." Is this still the case if you are married, but seperated, and live in two different residences? Tessa Quote Link to comment Share on other sites More sharing options...
Olly Posted March 4, 2008 Share Posted March 4, 2008 No, I think the main issue is that you need to prove that it's been your only, or main, place of residence. Just having the house in your name isn't enough - you have to have been registered to vote there, paying Council Tax, or paying bills there etc. They will check. If you were separated, but could prove you'd been living there, that should be ok. Don't forget that you only pay CGT on the gain, not the total sale price - so you can deduct the original purchase price, I accept that that isn't much help if property has gone up a lot during your ownership. There's also an annual allowance that you can use during the year of disposal if you haven't made any other gains. Quote Link to comment Share on other sites More sharing options...
Egluntyne Posted March 4, 2008 Share Posted March 4, 2008 I don't think that's right. According to direct.gov.uk, "If you are married or in a civil partnership and have two or more homes, both you and your spouse or civil partner must notify your own Tax Offices which of your homes is your main home for private residence relief purposes - and it has to be the same one." Is this still the case if you are married, but seperated, and live in two different residences? Tessa The chap over the road has got planning permission to build a property in his garden. If he lives in it (or at least appears to! ) for a year he can then flog it and avoid the tax. He will then be "reconciled" with his wife (again!) and save himself in excess of £250K. Just thought I'd mention it. Quote Link to comment Share on other sites More sharing options...
riane Posted March 4, 2008 Share Posted March 4, 2008 OH says..... In general CGT is payable on any home that is not your main residence, there are some specific exceptions (eg sale of mattrimonial home within two years of leaving). You could "appear" to live in your second home, but this is tax evasion and if discovered you will be liable for the outstanding tax, interest and a fine. You could perhaps sell you current home, move into your second home (you would have to stay for a while), then sell this and you may well avoid significant amount of tax. The other thing to point out is that there is an annual allowance (I think currently about £ 8,000) which is not coulnted as part of any gain, also you can take off selling costs and investment costs, eg the costs you've invested in improving the property (a good accountant can do good work in legally lowering your exposure). The bad news is that whatever is left of the gain (ie: sale price, less purchase price, sale costs and other costs, less allowance) is taxed as the "top slice" of income, so often in the 40% bracket. I do know that the chancellor has announced the abolishing of taper relief of sale of business assets, not sure whether this would affect this idea or not, but if it is a business asset you might get some relief from the new £1m lifetime allowance - not sure. And anyway the government has not made its detailed plans public so it is very difficult to get any clear advice about what the situation will be after next Tuesday. Quote Link to comment Share on other sites More sharing options...
Tiggy Posted March 5, 2008 Author Share Posted March 5, 2008 thanks guys, i won't be selling for a year or two so have time to work things out, I havn't lived in the house for 13 years & it has been let out for most of that time so I suppose could be considered a business property, I changed to a buy to let mortgage a while ago, I'd be really miffed if I had to give the government a huge wedge, OH & I pay enough in tax as it is. Quote Link to comment Share on other sites More sharing options...
chickenanne Posted March 6, 2008 Share Posted March 6, 2008 It's worth pulling together details of what you have spent in total on the house- renovations, mortgage interest, legal fees, stamp duties, etc etc as this will limit your gain. Also, can you put the rented house in joint names, such that the capital gain allowance is shared between you and your spouse - then could you both claim your CGT allowance for that year? Quote Link to comment Share on other sites More sharing options...