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How long do you need to reside in a property for before you are exempt from Capital gains tax when selling? |
I plan to buy a apartment off-plan for a fixed price, then sell for a profit when it is ready to move into in Summer 2008. Obviously I've considered CGT but unsure if I would eligible for this as it would be my first and only property owned. I have read CGT is not payable if the property was my main residence, hence my question above. I would be prepared to move in for short period if this would avoid CGT. Unfortunately, neither of the above answers are true when it comes to UK CGT. The first answer (2 out of 5 years) is the rule for capital gains tax exclusion of gain on a principal residence in the US. The second answer is too general. In the UK, you may exclude the gain on a principal residence for any period that you either occupied the residence or were deemed to have occupied the residence. The last three years of ownership are always deemed occupation, occupation as a principal residence counts of course, as does 1 year for any reason, and a period of employment abroad. You can look on the HMRC website for the others. I believe the condition is that you must return to the property after a period of absence for it to still be considered a principal residence. If you rent the property out, there is a separately calculated relief for that portion. Generally speaking - if it is your residence, and you have used it as such throughout your ownership, then you should be able to exclude the gain. In your particular case, you are in somewhat of a grey area. If you genuinely do live there and treat it as your private residence, then you may be ok. But bear in mind that the revenue may examine your case based on the facts, and how long you lived there may come into that. You need to reside in your principal residence two out of the previous five years at the point when you sell. But this property has to be your principal residence, not an investment property you buy to rent out. I am a CPA with a Masters Degree in Taxation. as long as it is your residence , one and only , you are not elligable at all for capital gains tax If it's your SMR, even for the brief period you intend to occupy, it is not liable to CGT.Just make sure that it is obvious even to HMRC that it IS your SMR. |
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