Fangoria

iTrader: (1)

Looking at buying a property - I'm aware of Principle Private residence rules which say that if you've lived in it for the last 2 yrs you would then I think you then have a 3 yr exemption on letting the property before CGT comes in? - and then you also have a £40k exemption and I presume current year CGT as well

What I'm trying to find out is if I live in the property for say a week and lets say I class this as my Principal private residence for that time - do the CGT rules change at all?

I guess when you see these programs about people doing up houses that they dont necessarily live in - how do they get awa with CGT on them - i.e. you spend £100k on the house and spend £50k and then sell for £200k - isnt there CGT to pay on the £50k profit?

Any comments?

Howee

I assume you'll be buying it with a buy to let mortgage? Therefore it might be difficult to persuade the tax man that it was ever meant to be a principal residence, why would you want to pay the premium interest rate if it were?

Also you need to live in it for more than a week to reset the CGT clock, more like 3 - 6 months.... If it was that simple the government would never get any CGT from rental property sales!!!

Fangoria

iTrader: (1)

You have a point on the BTL bit

The buy to let mortgages are not so bad - not much in the way of premium interest - i.e. I paid no premium to my current bank (FirstDirect) when I told them I was letting out a property and I have got a btl deal at 4.44% - ok not quite as great as some of the large discounted ones but not bad.......

Shame that when I did the tax exams to be an accountant it only covered the key points on Principle private residence...... the 2 yr rule only.........

Scooby96

See an accountant as I'm sure the thresholds / figures you mention arent accurate

Fangoria

iTrader: (1)

I'll read what it says on the Inland revenue site - taxation of rental income

What I could do is buy the property with a fairly hefty depoit on a normal mortgage - live in it for say 1 week, then look to rent and convert the mortgage to a BTL? - and get a 3 yr exemption


Rgds

fast bloke

40k CGT exemption isn't correct, you have a personal allowance and would also get taper relief, so it would depend on the number of years you own the property -
you could try the above, but if you get caught you'll be picking up the soap for big Hairy Hector You really need to live in it for several months (6 as above) during which time you get a CGT problem with your current PPR unless you are trying to sell it