When do you pay cgt??

[agencydude]

Hi

My wife and I want to sell our ppr and rented property and use monies to go off and buy one new property to live in.

The plan I had was to sell the ppr and move into rented property and make it our new ppr.
Then look around for a house to buy.
Once we bought a house to live in ,move into it and immediately sell the second house.

On discussing this with our solicitor we were told that we would have to live in the second house for at least a year in order not to pay capital gains tax.
Is this true??

Thanks

Aidan

 

[ClubMan]

I think your solicitor may be wrong. A property that was both a rental property and a PPR property at different times is still assessable for CGT. Say you own it for a total of 7 years, it was rented out for 5 and you live in it for 2 years and then sell it - in this case ((2 - 1) / 7) = 1/7th or c. 14% of any gain (less the usual expenses and allowances) will be assessable for CGT. You don't automatically gain CGT exemption by living in a property for a certain period of time. Maybe the timing in this case is such that you gain the CGT exemption but you'd need to post more specific details about the timings involved.

 

[cloughy]

Clubman, think you got the example wrong, if they owned it for 7 years and rented it out for 5 and lived in it for 2, then it would be assessed at 5/7 of thye gain for CGT. what you are referring to is where it was your PPR then rented in which you can take one year after buying another PPR and still call it your PPR, so therefore reducing the CGT, but in teh above case the CGT would be 5/7 of the gain less personal allowance at 20%.

 

[ClubMan]

Sorry - yes I got it wrong and I think that the 5/7ths figure is actually correct. Apologies for any confusion caused.