Capital Gains Advice
Discussion
I would be really grateful for any advice on the following situation re Cap Gains.
I have a property that i'm possibly looking to sell in the next year or 2. Currently it is a holiday let and lets up to 30 weeks a year - property value approx 200k.
I've been reading around the issue of Capital Gains but making little headway with the info on the HRMC website.
Questions are:
If this is registered as my only residence and i sold it (as a lower rate tax payer) what % would i end up paying?
Can i get private residence relief
Am i correct in thinking there is a 10k a year allowance?
Thanks
I have a property that i'm possibly looking to sell in the next year or 2. Currently it is a holiday let and lets up to 30 weeks a year - property value approx 200k.
I've been reading around the issue of Capital Gains but making little headway with the info on the HRMC website.
Questions are:
If this is registered as my only residence and i sold it (as a lower rate tax payer) what % would i end up paying?
Can i get private residence relief
Am i correct in thinking there is a 10k a year allowance?
Thanks
Why do you think it might qualify as your only residence?
Do you have an actual main residence already?
Have you at any time lived in what is now a holiday let or did you at any time ever intend to live in it as your main residence?
Is the property owned jointly with anybody else.
Yes, every year an individual receives an Annual Capital Gains Tax allowance. This is currently £10,600 per person.
Do you have an actual main residence already?
Have you at any time lived in what is now a holiday let or did you at any time ever intend to live in it as your main residence?
Is the property owned jointly with anybody else.
Yes, every year an individual receives an Annual Capital Gains Tax allowance. This is currently £10,600 per person.
Eric Mc said:
Why do you think it might qualify as your only residence?
Do you have an actual main residence already?
Have you at any time lived in what is now a holiday let or did you at any time ever intend to live in it as your main residence?
Is the property owned jointly with anybody else.
Yes, every year an individual receives an Annual Capital Gains Tax allowance. This is currently £10,600 per person.
Thanks for your response.Do you have an actual main residence already?
Have you at any time lived in what is now a holiday let or did you at any time ever intend to live in it as your main residence?
Is the property owned jointly with anybody else.
Yes, every year an individual receives an Annual Capital Gains Tax allowance. This is currently £10,600 per person.
To answer your questions...
I'm selling a property and transferring all my details to the holiday let which i will live in from time to time - i.e. outside of the main seasons. I assumed i could register this as my main residence - perhaps incorrectly.
The property will be wholly owned by me.
Thanks
rsole said:
Eric Mc said:
Is the property you are selling your current main residence?
Yes.Once you have sold that property, will you be buying a dedicated main residence as a replacement?
You state that you are planning on living some of the time in what is currently a holiday let. If you don't buy a new dedicated main residence, where will you be living when not in the holiday let?
Ok, to clarify..
I will shortly be in possession of a holiday let, it will be my only property and i will live in it for a number of weeks during the year i.e. in the off season. To all intents and purposes (doctors, electoral roll etc) it will be my dedicated main residence. the remainder of the year i will be travelling/working away.
I will shortly be in possession of a holiday let, it will be my only property and i will live in it for a number of weeks during the year i.e. in the off season. To all intents and purposes (doctors, electoral roll etc) it will be my dedicated main residence. the remainder of the year i will be travelling/working away.
The problem is the fact that it is a holiday let rather than a rental property. The fact that you have defined it as a Holiday Let means that it is subject to a different set of tax rules compared to the rules that relate to a main residence or a normal rental property (buy to let).
In most cases the tax treatment of holiday lets is more beneficial for tax purposes than a simple buy to let. For instance, there are more more favourable Capital Allowance claims available and better treatment under CGT on disposal.
If it is a holiday let, I don't think that you could claim it as a main residence as it would be impossible for you to be able to use the residence as your permanent residence due to the fact that for it to be a holiday let it would have to be available to holiday makers for a defined minimum period during the year.
In most cases the tax treatment of holiday lets is more beneficial for tax purposes than a simple buy to let. For instance, there are more more favourable Capital Allowance claims available and better treatment under CGT on disposal.
If it is a holiday let, I don't think that you could claim it as a main residence as it would be impossible for you to be able to use the residence as your permanent residence due to the fact that for it to be a holiday let it would have to be available to holiday makers for a defined minimum period during the year.
It is highly uinlikely that a Holiday Let could be reclassified as a Main Residence whilst it is still being used as a Holiday Let. The rules determining a Holiday Let for tax purposes preclude the possibility of anybody being able to claim that is their permanent residence or even being CAPABLE of being used as a permanent residence.
It would have to cease being a Holiday Let before any claim for Main Residence could be made.
This limitation would not apply to a normal Buy To let because Buy to Lets do not have restrictions on lengths of occupancy when it comes to tax treatment.
The main advantages of a Holiday Let is that Holiday Lets are looked on as being much closer to a trading activity compared to a Buy to Let. A Buy to let is essentially an investment and rents are looked on as Investment Income. Therefore, normal CGT rules and rates apply on disposal.
A Holiday Let, being akin to a trade, means that it will attract the more generous rates of CGT (i.e. Entrepeneur's Relief) on disposal compared to a Buy to Let.
Some general guideline here -
http://www.direct.gov.uk/en/moneytaxandbenefits/ta...
It would have to cease being a Holiday Let before any claim for Main Residence could be made.
This limitation would not apply to a normal Buy To let because Buy to Lets do not have restrictions on lengths of occupancy when it comes to tax treatment.
The main advantages of a Holiday Let is that Holiday Lets are looked on as being much closer to a trading activity compared to a Buy to Let. A Buy to let is essentially an investment and rents are looked on as Investment Income. Therefore, normal CGT rules and rates apply on disposal.
A Holiday Let, being akin to a trade, means that it will attract the more generous rates of CGT (i.e. Entrepeneur's Relief) on disposal compared to a Buy to Let.
Some general guideline here -
http://www.direct.gov.uk/en/moneytaxandbenefits/ta...
Eric Mc said:
It is highly uinlikely that a Holiday Let could be reclassified as a Main Residence whilst it is still being used as a Holiday Let. The rules determining a Holiday Let for tax purposes preclude the possibility of anybody being able to claim that is their permanent residence or even being CAPABLE of being used as a permanent residence.
It would have to cease being a Holiday Let before any claim for Main Residence could be made.
This limitation would not apply to a normal Buy To let because Buy to Lets do not have restrictions on lengths of occupancy when it comes to tax treatment.
The main advantages of a Holiday Let is that Holiday Lets are looked on as being much closer to a trading activity compared to a Buy to Let. A Buy to let is essentially an investment and rents are looked on as Investment Income. Therefore, normal CGT rules and rates apply on disposal.
A Holiday Let, being akin to a trade, means that it will attract the more generous rates of CGT (i.e. Entrepeneur's Relief) on disposal compared to a Buy to Let.
Some general guideline here -
http://www.direct.gov.uk/en/moneytaxandbenefits/ta...
Thanks EricIt would have to cease being a Holiday Let before any claim for Main Residence could be made.
This limitation would not apply to a normal Buy To let because Buy to Lets do not have restrictions on lengths of occupancy when it comes to tax treatment.
The main advantages of a Holiday Let is that Holiday Lets are looked on as being much closer to a trading activity compared to a Buy to Let. A Buy to let is essentially an investment and rents are looked on as Investment Income. Therefore, normal CGT rules and rates apply on disposal.
A Holiday Let, being akin to a trade, means that it will attract the more generous rates of CGT (i.e. Entrepeneur's Relief) on disposal compared to a Buy to Let.
Some general guideline here -
http://www.direct.gov.uk/en/moneytaxandbenefits/ta...
The whole tax treatment of Holiday Lets has been subject to much debate and change over the past couple of years.
In the last days of the Labour government, it was announced that the taxation of Holiday Lets would be brought into line with Buy to Lets. This was supposed to be part of the "simplification" of tax. But, as you will now doubt gather from what has been outlined above this would have, by and large, removed most of the tax breaks associated with Holiday Lets and people would have ended up paying a lot more tax - especially on disposal.
Most of these changes were ditched by the Coalition government although they have introduced stricter time limits for periods of occupancy.
Beware when a politician trumpets a "simplification" to the tax system. It invariably means you will be paying more tax.
http://www.thisismoney.co.uk/money/news/article-17...
In the last days of the Labour government, it was announced that the taxation of Holiday Lets would be brought into line with Buy to Lets. This was supposed to be part of the "simplification" of tax. But, as you will now doubt gather from what has been outlined above this would have, by and large, removed most of the tax breaks associated with Holiday Lets and people would have ended up paying a lot more tax - especially on disposal.
Most of these changes were ditched by the Coalition government although they have introduced stricter time limits for periods of occupancy.
Beware when a politician trumpets a "simplification" to the tax system. It invariably means you will be paying more tax.
http://www.thisismoney.co.uk/money/news/article-17...
Gassing Station | Finance | Top of Page | What's New | My Stuff