advice on possible ways to minimise or avoid payin tax when selling property?

Question

I have a 3 BR house which is currently let out.I wish to purchase another 3 BR house in liverpool area.I intend to live here for 3-4 years and then sell both properties.
I am told I may have to pay tax on the first property if I am not staying in it at the time of selling.
Is there any way out of it,or how long do I need to stay in it for me to avoid paying tax/minimise it ,or can my wife and kids stay there for a while just before selling it

Answer 1

Many good points from Debs there.

You have been told that you may have to pay tax if you are not living in the property at the time of sale. This is rubbish. Capital Gains Tax is applicable to all sales of chargeable asssets (such as porperties) but there are certain reliefs available.

The main relief is Principal Private Residence relief (PPR). The total gain you make is deemed to accrue evenly over the whole period of ownership but periods where the property was your PPR are exempted.

The PPR is available for all the periodss in which you were actually living in the property as your main residence plus the last three years (making sure not to double count any period in the last three years you were actually living there).

There is alos a lettings relief which can effectively double the PPR subject to a cap of £40,000.

Is the property in your name or do you own it jointly with your wife? If you are the sole owner consider transferring it to joint ownership before it is sold.

You need to give a lot more information before any specific advice can be given but perhaps the above has given you some idea of the questions which you will need to ask your tax advisor before actually selling the property.

Answer 2

Firstly, being married does not help you in this instance. The relief for not paying tax on the sale of houses is called the principal private residence relief (PPR) and you only get 1 relief per couple. If you were not married, you would get 2. There are various rules about how long you have to occupy the house in order to claim the PPR relief. You have done the best thing by seeking advise before buying another property although you may already be subject to tax on the house you are already letting. Anyway, there are various things that can be done, ie it may be better to move into the house that is already let and let the new one instead but this will depend on the time you have owned this house. It is hard for me to give you specific advise as I don't know how long you have owned the 1st house, whether you have lived in it at all (this will help reduce any tax bill), if its possible to live in it just before selling it (this may help too), What did you pay for the house, how much will you sell it for? etc etc. You only pay capital gains tax on the profit, not the selling price.

In summary, if you have owned the 1st house for more than 3 years you will more than likely have a tax bill, but you may be able to reduce the bill with some careful planning. Please go and see a Chartered Tax Accountant/advisor, telephone an Accountants firm from the yellow pages and ask them if they have a tax specialist with the qualification CIOT (Chartered institute of taxation) , and they can help you plan accordingly. I promise you that what they cost will be more than paid for in tax savings!

Answer 3

finding on how plenty fairness you have in living house a million,own loan it to the hilt so as that as quickly as you sell it on,you will no longer have plenty income to pay tax on! on the different hand,stay in living house 2,sell it and flow into living house a million for twelve months and then sell that one.You do get an allowance each and each year for the style of investment,ask somebody who is conscious approximately it.