I am a low paid worker in London and could not afford to buy a London flat to live in. So I rented in London and got on to the property market by buying in the North of England.
I took ownership of the off-the-plan property in early September 2003 and started letting it out in late September 2003. In March the tennant will probably move out or may extent until September 2004.
If I sell up at either of those times, will I have to pay capital gains tax on the increase in the property price?
Bought for 124,500 - now worth 140,000ish. I am British citizen and lived in it for 10 days as it was new-build apartment and I prepared it for renting out.
Also. Would it make any difference if I lived in Australia for a couple of years and sold it while I was a Aus. resident (ie. not a UK resident).
Or... what If I didnot sell it and returned from Australia and lived in it for a perioud of time before selling, then would I pay capital gains.
To the 124,500 add the incidental costs (legal, survey) if there were any, and from the 140,000 deduct the anticipated selling costs (estate agency, legal). Looks like your gain would be less than 14,000, of which nearly
8,000 would be exempt if you made no other capital gains during the same tax year as the one in which you sold the house. So only 6,000 would be taxable, and since you are "low paid", which I'll interpret as all your income being less than 29,000, this means the most you'll pay in CGT will be about 1,200.
Well, first you said "I've never lived in it", now you say you "lived in it for 10 days". It does sound like you just camped there, i.e. it wasn't really your Principal Private Residence. So you'd not qualify for Private Residence Relief. If you did live in it properly, then of course you'd get full PRR with no CGT payable at all.
Not sure. Probably not.
You'd pay a lot less, because if you establish genuine PPR status, you'll automatically qualify for the 36 month rule, and also for Lettings Relief. Depending on the figures, you might end up paying nothing.
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