we own 2 properties next door to each other, we have rented one house for 6 years but would like to move. If we moved into the rented house for 2 years and sold our previous house would be exempt from capital gains tax, as we would like to move.
2006-09-27 07:39:30 · 8 answers · asked by grundybernadette 1 in Business & Finance ➔ Taxes ➔ United Kingdom
In the UK, if you own two properties, you are exempt from paying CGT on your primary residence if you sell it. If you sell a secondary property, you will have to pay CGT on it, but im sure you already know this.
If you moved into the house you currently rent out, then i would think that this would become your primary residence and i would imagine that you will have to pay CGT on the house you sell.
To be honest, this is an odd one and i would need to refer to my tax books. Im sure there must be a way around paying CGT. I will have a look later to see if there is a way round paying CGT. I have one or two ideas.
2006-09-27 07:53:20 · answer #1 · answered by Peakey 3 · 0⤊ 0⤋
Depends.
If you move from your existing house, you have 2 years to reinvest any profits you have in that property, tax deferred, unless you take the one lifetime tax exemption on homestead gains.
Once you have lived in your second home for 3 years, you can sell it, and roll the gains over as a primary residence. Howvever, this is where it gets tricky, if you claimed your property as an income proerty before, and depreciated that asset, then you must reimburse that deduction, plus interest to the IRS when you sell the property, or pay full capital gains on the property at the time of sale.
2006-09-27 07:46:21 · answer #2 · answered by Anonymous · 0⤊ 0⤋
patrickmc is going by the old law regarding sale of personal residence. Currently if you live in a house 2 of the 5 yrs prior to selling it you do not pay tax if the gain is less than 250,000 or 500,000 if married. You would have to pay tax on any depreciation claimed on the property since 1997. This tax is not capital gains, but ordinary income.
2006-09-27 08:22:07 · answer #3 · answered by irongrama 6 · 0⤊ 0⤋
If you have lived in the present house as you main home for two of the last five years you will have an exclusion of $250,000 if you are single and $500,000 from any capitol gain. If you than live in the former rental for two years you will have the same exclusion however the prior depreciation will be use to adjust your base in the house. you should run all of this by a tax professional before selling or moving as it may just save you a great deal of money.
2006-09-27 07:59:19 · answer #4 · answered by ? 6 · 0⤊ 0⤋
Capitol gains has one rule: 2 year rule.
You will have to pay unless you leave a 2 year gap between. So, u are more than ok. Consult ur tax advisor if ur still unsure
2006-09-27 07:47:32 · answer #5 · answered by Justme 2 · 0⤊ 0⤋
You would be exempt from having to pay capital gains.
2006-09-27 07:47:33 · answer #6 · answered by Anonymous · 0⤊ 0⤋
particular, however the CGT has a each year allowance so there could be a deduction. look for a tax specialists opinion nevertheless as you may tutor which you have have been given been paying the taxes someplace else additionally.
2016-10-18 02:06:34 · answer #7 · answered by ? 4 · 0⤊ 0⤋
5 yrs
2006-09-27 14:44:06 · answer #8 · answered by linluv2001 2 · 0⤊ 0⤋