cgt on property

N

norris

Guest
I own a flat in UK, lived in it from august 2003 till july 2004 when I moved to Ireland for work.
The flat is not rented out and I use it to visit every so often. I have a small mortgage on it so could afford not to rent it out.
I am now planning on selling it.
The house I live here in Ireland is not owned by me. I do not own any other property other than the one in the UK, my money is invested in other commodities.

My question is, do I have to pay CGT if I sell the property?

thanks
Norris
 
If the flat was your PPR and you moved away for work reasons, then 4 years of absence count as if it was still your PPR for CGT purposes, but only provided you "re-occupy" it after the absence. So if you claim to "re-occupy" it before selling it, you get 4 years' absence counting as period of owner-occupation.

Regardless of re-occupation, the last three years of ownership will count as owner-occupation for CGT purposes.

So the taxable gain is reduce proportionately. After that, the first 10,100 pounds of profit is exempt from CGT, and the rest is taxed at 18%, provided it doesn't take you to higher rate tax in the UK. As presumably you don't have much income in the UK, your taxable gain, if any, is unlikely to take you over about 43,000 pounds or so.

Also when calculating your gain, you get to deduct improvement costs (if any) and buying and selling expenses, including stamp duty.

My point is your taxable gain, after the above deductions, is likely to be very small or even non-existent, though it depends on your flat, of course, and how much it increased in value.

Not sure, whether you can claim your flat as your PPR throughout the period of ownership, as it's in the different country from where you live. If you were still living in the UK, just in a different place but still stayed at the flat now and again, you could have made an election to the British Revenue to say that this flat was to be considered as your PPR. This election can be made up to 2 years later, so you could elect now for the period beginning February 2009.

Then the period July 2004 to July 2008 would be covered under move away for work rule, and from February 2009 to date of sale under the election. Leaving you with only a fraction of the gain, part of which would be reduced further still under the last 3 years ownership rule. The remaining gain would likely be very small and below 10100 pound annual exemption limit.

It may be worth you checking with an accountant to see whether you can make this election even though you work in Ireland.

Even without the election, you can reduce the gain considerable under 4 years away for work (but need to "re-occupy" the flat, even for a short time) and last 3 years of ownership rule. Then the annual exemption will reduce the gain further or even eliminate it.

Do your figures to see what the gain is likely to be. Then decide if it's worth looking into making this election or "re-occupying" the flat.

Also if you are married, you can transfer the flat into joint ownership with your spouse before selling it, to halve the gain to each of you, to use two annual exemption limits of 10100 each.
 
I'm no expert. but would it be easier just to live in the flat for a wee bit and then say nothing to the solicitor dealing with the sale. Just say you have been living there always, how would he know otherwise.
How can he prove you haven't always lived there??
 
You don't have to declare to the tax man if you sell a house and as you have owned the house for 8 years you may be outside the timescale.

Quote from Directgov website which I would think applies to you


Working abroad
If you have been working abroad you will normally be treated as though you have lived in the UK property, and so qualify for Private Residence Relief, provided that both of the following apply to you:
you live in the property both before and after your absence
you have no other home which qualifies for private residence relief
This relief also applies when it is your husband, wife or civil partner who was working abroad.
You will still get Private Residence Relief for your time abroad, even if you do not return to live in the UK house, provided that the only reason you do not come back to live in your former home is that the employer requires you (or your husband, wife or civil partner) to work elsewhere.

Charlie