LSherratt

iTrader: (1)

Last year I bought a small house as an investment on a 20 year buy-to-let mortgage.

Now, due to my job, I have to live on-site so I could never live in the house I bought last year because it is too far away and I need to be on-site at all times incase there are any emergencies (it's a farm and I manage livestock).

I would happily live in the house I bought but I can't due to the above reason. I am aware you don't have to pay Capital Gains Tax on your own home, but you have to pay it on a house if you're letting it.

Is there anyway I could be exempt from paying CGT when I eventually come to sell it? I've had a look on the internet but it's all very confusing!

If so which I think may be the case, do I need to write to HMRC to make them aware of this so that in the future there's going to be no shock?

hodgy0_2

What is the legit reason?

What has your living/work arrangements got to do with cgt on an investment property?

LSherratt

iTrader: (1)

I thought that if you sell your buy-to-let property, you are taxed on any profit that has been made in the sale of the house in the future?

But, you don't have to pay tax on any profit on your home when you eventually come to sell it, if it is your main home/residence and you live in it.

My legit reason is that I would happily live in this house as my main property (therefore I wouldn't have to pay any tax on the profit when you sell it), but I can't due to my job as I have to live on-site.... hence why I let it instead.

billythekid

Not really going to fly.

You could use a specialist to attempt to dodge it but the cost is going to be quite high.

hodgy0_2

Yep, not going to fly

You purchased the property as an investment, not to live in

So the rest of your post is irrelevant

That is not to say there are not legit of avoiding cgt using the main residence rule

LSherratt

iTrader: (1)

How about if I swapped the mortgage over to a residential mortgage and lived in it for a month, and then tell HMRC and let it?

Midlife......

iTrader: (2)

Gaining a pecuniary advantage HMRC would claim........ Fraud. You bought it as an investment they would say.

Shaun

alistair

As long as you don't have another property and you live in it for a period of time before selling, wouldn't that be ok ?

You would come unstuck if you had another "main residence"

adz556

iTrader: (5)

You would need to live in it for 3 months I think. The fact you bought it as a buy-to-let would be your downfall.....ill ask my dad tonight as he deals with capital gains, inheritance tax etc

LSherratt

iTrader: (1)

Thanks a lot that would be a great help.

If its any help, I bought it knowing I wouldn't be able to live in it due to my job in advanced, so I thought that I should get it as a buy-to-let straight away from the start.

I'm not trying to be fraudulent, but there must be some exception/allowance somewhere?

adz556

iTrader: (5)

Pm'd

hodgy0_2

then you are stretching your definition of "legit"

but as people have said there are ways

the type of mortgage in itself is not really relevant (i think) it is what is you main residence

David Lock

In the light of the current property market if you only bought it last year it can't be much of a capital gain on a small house?

Perhaps you spent any small gain on tax deductable property improvements before tenants moved in?

dl

PaulC72

I would guess that if you have no other property in your name i.e the owner of it then you decided to then live in the one you rented out thus making it your permanent residence you would be ok as must be able to change your mind especially if you only own one house?

Also I always thought you had to live somewhere for 12 months as your residence to make it you residence? (although I imagine that loophole has been closed?)

Steve777

iTrader: (8)

HMRC rules are very clear there is a fact sheet in their website

Ant

I thought you lived with your parents? it was your dad that had someone in the house?

LSherratt

iTrader: (1)

Yes I live on the family farm in the farm house with my parents (we're in the processes of getting permission for an agriculture dwelling at the moment but that's another matter), but I have my own house too far away to live in which I let out instead.

You'd be surprised


Thanks for all the help so far anyway guys.

cookstar

iTrader: (6)

I believe your not taxed on the first £8k or so anyway, it's not much but it's a start.

madscoob

iTrader: (3)

you are allowed to capitally gain £9200 per year with no tax
should you choose to live there (on paper ) for 12months before selling it becomes main residance so no tax at all

hodgy0_2

Do you get 100% cgt relief on the increase in value whilst you where renting it

So say you owned a property for 20 years, rented it for 15 years, in which time it had increased in value considerably - do you get 100% tax relief on all the capital gain by simply moving back a year before you sell it?

pslewis

Just pay the Tax and help the Teachers retain their superb T&C's .... and pension!

GlesgaKiss

LOL @ 'legit reason'.

madscoob

iTrader: (3)

simple answer is yes from what i was told.
£9200 per year regardless if you live in it or not, but when it comes to sell up. in order to pay sod all it must be your main residence for 12 months ,if you don't believe me ask a good accountant, who knosw tax inside out, my mum was and did

LSherratt

iTrader: (1)

After a lot of searching, I've managed to find something on the HMRC website....

If you live in accommodation that is job-related and you also own a dwelling house that you intend to occupy as your only or main residence, the dwelling house you intend to occupy is treated as actually being occupied by you as a residence during the period in which you intend to occupy it, even if you never actually live there. This means that you may nominate that residence as your only or main residence and get relief on the whole or a part of the gain.

I knew it

hodgy0_2

but are you are letting it whilst not living there

LSherratt

iTrader: (1)

Yes I'm letting it while I'm not living there. It doesn't say anything on their website about this so it shouldn't make any difference.

Actually, this is all rather annoying now lol.... going to ring their helpline tomorrow morning to get this clarified once and for all.

hodgy0_2

dear god!!!!!!!

stevie boy

how can you intend to live there if you have tenants in?

i would've thought you'd have to get shut of the tenants whilst you're intending to live there

LSherratt

iTrader: (1)

Well I intend to live there, but I cannot due to my job.... so instead of it laying empty for years, I let it out instead, while still making it my main residence? I'm gonna clear this all up tomorrow via the helpline

hodgy0_2

oh "you intend to live there" sorry missed that bit, makes all the difference

well that clears it all up,