Capital gain tax help please

[CSLmarson]

Can someone please help me

I have owned my flat for 4 years in London i bought it for 250k and it is now valued at 480k

For the last 12 months I have rented a flat with my misses but we are now looking to move back in to my flat I own

I know I have 18 months to sell before I get hit with capital gain tax.

My question is how long do I have to be back in my property until the 18 months is reset ??

Or does it not work like that ????

Cheers

[Alpinestars]

You'll get letting relief for the period you let it (cureently 1/4 of the gain but limited to £40k) and principal private residence relief (3/4) for the time you live in it. Are you moving in after the tenancy comes to an end?

Whether you have a gain or not depends on how long you live in it after the tenancy. Currently your letting relief is limited to £40k (lower of 1/4 of the gain and £40k). So of the total gain of £230k, £17.5k is taxable.

Assuming the property does not increase further in value, and you live there another 2 years (you could live in it for 6 months and add the 18 months selling it) your gain will be nil.

[CSLmarson]

Cheers pal - really helpful. So am I right in thinking if I move back in for another 6 months, then let it out again for 12 months, then sell it, the CGT will be nil?

[Eric Mc]

It's not altogether based on time spent living in the property. Intent is also part of the equation. There have been cases where someone actually lived in a property while they were doing it up and assumed that living in it would be enough to trigger Main Residence Relief. It didn't, because it was never his proper home.

So, if you move back in for a short period but have no intention at making it your permanent residence, that period of residence may not count for Main Residence relief.

[Alpinestars]

CSLmarson said:

Cheers pal - really helpful. So am I right in thinking if I move back in for another 6 months, then let it out again for 12 months, then sell it, the CGT will be nil?

Broadly that could work, but if you move back and and let it again, HMRC may well look into intent a bit more than otherwise. But there's no reason you should fail so long as you really do intend to make it your main residence. Examples of factors HMRC look at are;

Where are you registered to vote?
Which address is used for correspondence? Banks, Credit cards, Council tax etc and keep the records!
At which address is your car registered and insured?