2nd property sale and CGT

Hi,

How long after the sale of a 2nd property do you have before CGT must be paid?

Thanks,

Eric

Reply to
Eric
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My guess would be January 31st in the year following the tax year in which the property was sold.

Tim.

Reply to
google

So if it were sold now the CGT would be due Jan 2008.

That's great thanks.

snipped-for-privacy@woodall.me.uk wrote:

Reply to
Eric

I think so - you will declare it on your tax return and tax will be due on Jan 31st.

But I said it was a guess. Maybe there is something like self employment where you have to pay on account. I've never paid CGT.

Tim.

Reply to
Tim Woodall

CGT is not paid on account.

Reply to
Bert

In article , Eric writes

If this second property is not yet sold then maybe its worth seeing if a way can be found to get PPR exemption.

Reply to
Jon Griffey

Right...how does ppr exemption work?

Cheers.

Reply to
Eric

If you've lived in the house as your main home then you get the time you've lived in it, plus the last three years as exempt time.

If you've already lived there then moving back in won't help. But if you've never lived there then moving in for six months (doesn't actually have to be six months but has to be long enough to convince the taxman) will get you 3 years exemption. (The three years will overlap your six months so you can't count it twice - it would be different if you'd lived there for six months when you bought it)

Additionally, if the house has been let then there is residential lettings relief that is worth the same again as the PPR up to a maximum of 40K

I think the sums work out something like this:

Assume you've owned the house for 5.5 years. Bought for 200K, now worth 350K

Currently you are looking at a tax bill of about 50K (150-8.8)*.4 less taper relief)

Move in for 6 months.

Now your 150K gain gets divided into 3 years PPR plus 3 years taxable - so 75K taxable.

Then the residential lettings relief is another 40k so 35k taxable.

So your final tax bill will be about 10K (35-8.8)*.4 less taper relief)

Unless you are taking home over 80k/year it's probably worth you giving up your job to go and live in the house for a little while. ;-)

(Of course, house prices could fall 40% in the next six months. And IANAA so all the above could be completely wrong or illegal. And these are made up figures so may not apply in your case, especially the bit about giving up work)

Tim.

p.s. Please don't top post.

Reply to
Tim Woodall

Thanks for the info Tim..is it common practice to do this?

Reply to
Eric

That's all very true, but if this is the OP's second house he needs to remember that he cannot have two PPRs at the same time. If he lives in this one for 6 months he will lose 6 months PPR in his current house. It may well still be worth doing, but there might be a CGT liability on his current PPR which he should consider. He gets 3 years PRR on the second house but loses 6 months PRR on the first (unless he sells it within 3 years of moving out).

Robert

Reply to
Robert

Sure, but loss of 6 months' PRR on a long-term main residence is likely to be negligible. A sale after 10 years of ownership would make only 5% of the gain taxable. That comes down to 3% if full taper relief applies. Given an annual exempt amount of, say, £9500 (projecting to the 10th anniversary of the replacement of indexation by taper), the gain would need to exceed £316k before loss of half a year's PRR could even begin to create any actual CGT liability.

Reply to
Ronald Raygun

"Ronald Raygun" wrote

... unless you've already used up your annual exempt allowance elsewhere :-(

Reply to
Tim

But no-one would be so inept when planning the timing of when they liquidate their capital assets to allow this to happen.

Would they?

Reply to
Ronald Raygun

well, 5% of a 10 year increase in the first house's value might be larger than 100% of 0.5 year gain of the second house's value. In both cases the amount is 6 month's apperciation in the house's value. the advatage of taking the hit on the first house is that you dont have to pay it until later, when/if you sell it, plus the taper relief that you mentioned.

Robert

Reply to
Robert

Possible but unlikely, and in any case irrelevant unless the 2nd house has only been owned for half a year.

No.

The point is that moving into the 2nd house for a "decent" interval (6 months was suggested) would establish bona fide PPR status of the 2nd house for at least part of the period of ownership, thereby acquiring entitlement to 36 months' worth of gain exemption and therefore up to a further 36 months' worth via Letting Relief.

Reply to
Ronald Raygun

Sorry, yes of course, you are right.

Robert

Reply to
Robert

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