CGT principal priv residence

J

jeanhib

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A modern day dillemma- we bought an old house-renovated it- and meanwhile put our own house on the market assuming we'd sell it and move into newly renovated house. Houseing boom to bust has meant that after one viewing in nearly 9 months we haven't a chance of selling the house in the near future-in the meantime the renovations are complete ad we are on the move-my worry- I understand we have a window of only 12 months to sell our PPR after which time we come under CGT radar and would have to pay fpr time wen it's not our PPR- this seems very unfair in current times when many people are trying to sell their home but simply cannot-I hear in UK you have 3 years to be sold. Anyone any views ?It would break my heart to pay a penny in CGT- we paid 33,000 in stamp on the purchase! And don't start me on property tax-grrrrr
 
In practice you shouldn't have an issue as it's highly unlikely that your former home has appreciated in value over the last 12 months, or will appreciate in the near future. In addition, the 12 month window is designed to stop speculators using PPR relief to make a quick buck. Given the present climate, Revenue officials should have a degree of pragmatism when assessing a claim for PPR (remember the sale of your PPR isn't exempt from CGT...in theory the CGT is calculated and then PPR relief wipes the CGT out).
 
It's not about whether the house appreciates in the next 12-months. Once you go over the 12-months, then the CGT is pro-rated on a straight-line basis from the date of purchase to the date of sale. It does not take into account at what point the gain was made.

OP, while I understand your dilemma, if you have to pay CGT then at least you *are* making a gain, not a loss. That's the way I'd look at it.

Sprite
 
I could be wrong, but I would be very surprised if Revenue raise notices of assessment to CGT for people in the OP's situation, especially given the present climate. Evidence of a concise effort to dispose of the property and of the taxpayer's inability to discharge the liability may suffice.
 
Unfortunately John we live in a self assessment tax system which means we must account for the tax or face the penalties. And in relation to Revenue having regard to current climate, you must be kidding!!! They are broke remember and need all the money they can get - they have no notion of being helpful on that one I imagine!

Still though - would be nice of them!
 
I did wonder if there was a facility to kind of put a marker down ie. as of this date we no longer reside in the house and its present value is X . Then in the event that it sells at a future date the chances are the value will be less than x and therefore no gain- . But I do not think that operates and I'd be liable for whatever gain accumulated over the whole period of ownership. As I say in the circs it would break my heart as we have paid sooo much in Stamp duty and vat on the purchase and were selling the house as a PPR -
 
Jeanhib,

I sold a property sometime ago that was originally my PPR and had gone through phases of rental, non-use and PPR again. Here's the situation:
a) You do not have to pay CGT on the FINAL twelve months that you own the property. (Note this has nothing to do with date you move out only when you sell).
b) Any CGT liability will only be proportional to the period of ownership when it was NOT your PPR.

e.g. You own a house for 10 years and sell. You live in it for 8 of those years. It is vacant for 2 but as the final year is same as PPR you would calculate your CGT by i) subtracting your purchase price plus buying and selling costs from your sale price ii) applying the CGT rate e.g 25% iii) Paying 10% of that figure (as only one of the 10 years is liable).

The Revenue Website and forms make this calculation and examples clear.

So, as someone else pointed out you only need to worry about any CGT 12 months AFTER the market rises to above what you paid for it (Don't hold your breadth!), and even then depending on how long you occupied it as PPR you would be only paying a proportion of the potential tax in any case.

Enjoy your new house and out these worries aside!
 
Thanks Daruma- I suppose we are lucky in that we bought back in 2001- so we are still "upon the deal" but any more tax to this Gov makes me cringe- I feel its all going into some black hole- but thanks or the advice which i will keep in mind-incidentally we love the new(old) house!
 
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