Tax Query

crispy

Hello,

I wonder if anyone could please advise me on the following,

A friend who has been living in their owned property for the past 5 years has now rented out this property, aquired another and moved into it immediately. After 8 months of living in and doing up the new property they are looking now to sell for a profit and move back into the orignal property. They had asked me about the tax cosequences but to be honest even though I have finished aat and part cima I felt a bit embaressed not to 100% have an answer. My initial thoughts were: -

1. Even though they have lived in the new property, the rented house will still be seen as their main residece and the sale of property would be liable for Income Tax/CGT?

2. Their rental income could be set off agaist mortgage interest + letting agens fees?

Thanks for any feedback.

citrus_sharp

They could inform HMRC that they elected the new property as their Principal Private Residence, and then would not have to pay any CGT on the sale of it, then when they sell it elect their old property as their Principal Private Residence.