Selling 2 properties in a tax efficient manner..

[danp]

Wonder if anyone can kindly advise on CGT implications of the following, we have:

Flat 1 - purchased 10 years ago and I have lived in it ever since.
Flat 2 - purchased 1.5 years ago and has been rented out most of that time.

Looking to sell both at same time (as they can potentially be converted into a house, and I think would be worth more than the 2 x flats sold individually).

So.. prior to selling we're thinking of moving into Flat 2, and nominating that as primary residence.

Believe we have to make such a nomination within 2 years of buying the 2nd flat.

Something along these lines:

http://news.bbc.co.uk/1/hi/business/8067929.stm

http://www.taxinsider.co.uk/property_tax_insider-a...

- Are there any time scales as to how long I have to live in Flat 2 for it to be main residence? (couldn't see anything)

- Any other particular implications ref the above?

Even if we don't sell them we are thinking of moving into flat 2 anyway, as it's ground floor and will be easier with our 1yr old toddler.

Both flats are in my name, though I did get married in March this year.

Planning to go and see a tax accountant next week, but any advice here would be welcome.

TIA, Dan

[m4ckg]

I may be wrong but I thought you had to live in a residence for 6 months to get away with paying CGT

[Paul Drawmer]

danp said:

...Flat 2 - purchased 1.5 years ago...

How much taxable gain are you expecting?

[Stevenj214]

Just a thought...

if you done the conversion yourself, it would be worth more (if you are correct) and it would have been your main residence for 10 years. Just, extended...

[55allgold]

Paul Drawmer said:

How much taxable gain are you expecting?

This. With property prices relatively stable/falling, and by the time you account for all of the flat's purchasing and selling costs I'd have thought that there wouldn't be very much actual gain.

The various lettings-related relief, etc may also help reduce liability. (It's 4 years since I sold my flat in similar circumstances, and I was amazed by how little CT I was liable for after taking into account all of the relevant reliefs).

I doubt it would be necessary (for CGT reasons) to move into the other flat for any length of time.

[danp]

Thanks for the replies, would anticipate a pretty decent gain, let's say enough to buy a very nice sports car, but not a supercar. ;-)

Thus definitely worth me looking into the scenario I mentioned, does anyone have any more insights?

Yep, Plan B might be to do the conversion ourselves, but could be a bit too much of a project for us.

Thx, Dan

[rfisher]

'Flat 2 - purchased 1.5 years ago and has been rented out most of that time.'

CGT = 0 for the last 3 years when you rent a property.

Sell away.

[55allgold]

danp said:

does anyone have any more insights?

To repeat: you absolutely MUST look into the actual reliefs available for lettings-related CGT. My circumstances were a bit different to yours and my info is potentially out-of-date (I sold in 2007), but I did pay an accountant to work it out properly. Best money I spent; result was a very low CGT bill on a flat that gone from £xx,xxx to £3xx,xxx.

I'd be very surprised if you had any CGT to pay (if only because of the relief mentioned by the poster above).