Reader Q: I own a property but have not always lived there – will I have to pay CGT if I sell it?

Reader Question:

Hi Damien,

I have owned a property for 14 years and lived there for the first 12 years of ownership. I moved abroad for 1 year and let the property for that year. I returned and lived there for another year before moving to another part of the UK. The property is now let for another year. I own one other property that I have never lived in and it is let (I think this is irrelevant). At present I am renting but I am thinking about buying another property to live in. I am concerned about Capital Gains Tax (CGT) liabilities on my original property when I try to sell it next year, once the current tenants have moved out.

 

My response:

This seems more complicated than it really is.

To quote the official HMRC rules

"if you have not always lived in your home, other than allowed periods of absence, multiply the total gain by a fraction equal to the period you actually lived in the dwelling house plus any allowed periods of absence plus any part of the final 36 months not covered by actual occupation or allowed period of absence, divided by the period of ownership. That part of the gain will be exempt"

So in other words if you sell the property within 36 months of moving out as you appear to be planning on doing then you shouldn't be liable to any CGT.

For more info please read the HMRC Private Residence Relief factsheet.

Best wishes

I hope that helps

Damien

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