CGT on property you used to live in?
Discussion
Hi All,
I'd always thought you could let a property you used to live in and it would never become liable for capital gains tax upon sale so long as you once lived in it (for 6+ months I believed). However doing a bit of reading I seem to have misunderstood or perhaps the rules have changed? Anyone understand the rules intimately and able to explain them to me as I'm struggling with HMRC's website explanation!
I'm interested in two circumstances:
1) Flat I have owned (sole) and lived in for 11 years, now proposing to buy a house (as 'tenants in common' with partner - not married ), live there, let flat. As I read the HMRC site, I have to nominate one home as my main home and that's free of CGT. Could my girlfriend nominate the house and me the flat, thus have both free of CGT?
2) Relative has a house which he's owned and lived in for 40+ years. He now has to go into a care home. We're letting the house to help pay the care fees. Can that house remain his nominated home to remain free of CGT?
I'd always thought you could let a property you used to live in and it would never become liable for capital gains tax upon sale so long as you once lived in it (for 6+ months I believed). However doing a bit of reading I seem to have misunderstood or perhaps the rules have changed? Anyone understand the rules intimately and able to explain them to me as I'm struggling with HMRC's website explanation!
I'm interested in two circumstances:
1) Flat I have owned (sole) and lived in for 11 years, now proposing to buy a house (as 'tenants in common' with partner - not married ), live there, let flat. As I read the HMRC site, I have to nominate one home as my main home and that's free of CGT. Could my girlfriend nominate the house and me the flat, thus have both free of CGT?
2) Relative has a house which he's owned and lived in for 40+ years. He now has to go into a care home. We're letting the house to help pay the care fees. Can that house remain his nominated home to remain free of CGT?
My understanding is that any time that you lived there is free from CGT. Also, a property that has been let but at some point has been your main residence is free from CGT for the firs 12 months and also the last 18 months. This is a completely linear scale, so if the property has gained £10k each year for 5 years, you are liable for CGT on £25k.
Seek proper financial advise on this though!!! I have been known to be completely wrong in the past.
Seek proper financial advise on this though!!! I have been known to be completely wrong in the past.
Yes, there are allowances for the period that you were genuinely resident in a house, they are outlined on the HMRC website. If in doubt, talk to an accountant.
However, both of the scenarios you have outlined would be viewed by HMRC as deliberate tax evasion and you wouldn't have a leg to stand on.
However, both of the scenarios you have outlined would be viewed by HMRC as deliberate tax evasion and you wouldn't have a leg to stand on.
Edited by anonymous-user on Monday 1st December 17:08
My take on the rules are:
Remember your common law rights - there are none when tax and inheritance comes into play, unless you have both made wills.
- If flat is only owned by you and is nominated as your home you should not be liable for CGT if sold
- Joint ownership on house by you and non-married partner will mean you will be liable to CGT on your half of the sale.
- Providing your relative has nominated house as home there shouldn't by CGT liability on sale
Remember your common law rights - there are none when tax and inheritance comes into play, unless you have both made wills.
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