Hi All
I am thinking of buying a flat. I intend to live in it for a little while, before moving aboard. After that who knows, I might come back and live in it, continue renting it or sell it. I have some questions re: my possible tax liabilities.
1A) If I live in the flat for a year, say, and then rent it out, would the full rental income be subject to income tax or would it be the amount less mortgage repayments and interest on repayments? Would the answer be any different if I was living abroad while the flat was rented out, i.e. what is my position in terms of UK income tax if I live and work abroad?
2) Say, I live in the flat for 3 years - I've made it 3 years this time because of the CGT 36 month rule - and then move out to rent a cheaper place down the road, i.e. I still only own the one flat in the UK. Is the flat I own still considered my PPR (in terms of CGT) - to put it another way, can a rented property ever be considered a PPR (in terms of CGT)?
3) Finally, say I move abroad, like it and decide to buy a flat in the new country (while still renting out my flat in the UK). According to a book I read, the UK taxman will consider my new foreign flat my PPR and so my UK flat will lose its PPR status (and therefore its PPR exemption status in terms of CGT). Is this true? Given that I would be complying with the laws in the new country, what has my foreign flat got to do with the UK taxman!?
Any help would be appreciated. Thanks in advance.
Richard