Hi,
I own a second property which was purchased 3 years ago for £103k and which has been rented out since then (assured shorthold tenancy). This property is located about 100 miles from where I live. The decision to buy there was based on the fact that I had family there at the time and the property prices where much lower than were I live. Since then the family has moved away and property prices have risen in that area. The current tenant has decided to move on so now is a good time to move the property closer to make it easier to manage. I've had some estate agents around and they have valued it at £210k - £220k, so the capital gain is substantial. Buying a similar property locally is still going to cost more than the £220k mark so all the gain will be reinvested.
I have been advised that rollover relief on capital gains does not apply to privately owned property that is let on a residential basis. If this is the case I would be faced with a crippling capital gains tax bill. It would be more sensible to keep the existing property and employ someone to manage it.
Can anyone shed any light on this for me? Is there any way I can avoid capital gains if I sell up and reinvest?
Thanks in advance, Nick.