Capital Gains Tax On A Right To Buy Property.
Capital Gains Tax On A Right To Buy Property.
Author
Discussion

catman

Original Poster:

2,491 posts

191 months

Sunday 23rd January 2022
quotequote all
Hi,

I'm in a fairly unusual position, in that I lived in a council flat for 20 years and then purchased the lease as a right to buy. I then lived there for a further 5 years, before being forced to move into rented accommodation in a cheaper area.

I had tried to sell it, but due to cladding issues, that wasn't possible. As I will sell it at some point, I'm curious as to whether the whole period that I lived there is used in any CGT calculation, or just the part after I purchased the leasehold.

From what I've read, it will make a huge difference to the cost. I've tried finding the answer elsewhere, but I've drawn a blank. Thanks for any replies!

bennno

14,097 posts

285 months

Sunday 23rd January 2022
quotequote all
catman said:
Hi,

I'm in a fairly unusual position, in that I lived in a council flat for 20 years and then purchased the lease as a right to buy. I then lived there for a further 5 years, before being forced to move into rented accommodation in a cheaper area.

I had tried to sell it, but due to cladding issues, that wasn't possible. As I will sell it at some point, I'm curious as to whether the whole period that I lived there is used in any CGT calculation, or just the part after I purchased the leasehold.

From what I've read, it will make a huge difference to the cost. I've tried finding the answer elsewhere, but I've drawn a blank. Thanks for any replies!
So you had council property with a big discount, lived in it for 5 years to meet purchase conditions and avoid discount clawback, then I'm guessing you’ve been renting it out?

It’s not at all unusual, Its is why we have an affordable housing crisis.

CGT payable on full uplift post purchase, however no cgt on % of ownership you lived there personally plus 9 months.

There is presumably no cost in this scenario? Just a huge profit to be eventually made.

Edited by bennno on Sunday 23 January 00:46

Saleen836

11,961 posts

225 months

Sunday 23rd January 2022
quotequote all
The first 15 years of living in the flat you paid rent as you did not own it,why would you pay CGT on a property that you did not own?

catman

Original Poster:

2,491 posts

191 months

Sunday 23rd January 2022
quotequote all
I'm not saying that I would. It's just that some of the websites that I've seen refer to the time that a property is lived in, rather than owned. Thanks.

Eric Mc

124,046 posts

281 months

Sunday 23rd January 2022
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Main Residency applies to a property you live in as a tenant as well, not just a property you live in that you own.

catman

Original Poster:

2,491 posts

191 months

Sunday 23rd January 2022
quotequote all
Hi, I understand that I can nominate a main residence, so that shouldn't be a major problem, thanks.

Eric Mc

124,046 posts

281 months

Sunday 23rd January 2022
quotequote all
There are restrictions and time limits for making elections on Main Residences so you need to be fully aware of the rules.

catman

Original Poster:

2,491 posts

191 months

Sunday 23rd January 2022
quotequote all
Hi Eric,
. thanks for your reply. I understand that I have to nominate within two years? I only moved in August 2021, but I'll get onto that soon!

bennno

14,097 posts

285 months

Sunday 23rd January 2022
quotequote all

The rules on this are pretty simple, cgt is payable on the difference between the purchase and sale price, less the % of time since purchase that you personally lived in the property as your main residence plus 9 months, less any unused cgt allowance.

You can't count residency periods pre purchase.


catman

Original Poster:

2,491 posts

191 months

Sunday 23rd January 2022
quotequote all
Thanks, that clarifies things.