CGT on Holiday homes
System
Posts: 100,534 🤖 Admin 🤖
This is my first post on the forum as a recently qualified AAT Technician so please treat me gently!
I was involved in a discussion re CGT on holiday homes the other day and would like to see if your thoughts were along the same lines as mine.
Scenario is the house was bought as a holiday home seven years ago and now the owners intend to sell their principal residence and move into the "holiday home" for a year before selling up to buy a bigger house.
They are under the (wrong?) impression that if they live there for a year then they are exempt from CGT.
I have explained that they will automatically get 36 months relief if they live there for any length of time as PPR but the rest of the gain would be chargeable.
Workings would be
Gain x 36/total ownership = chargeable gain
Taper relief 70% chargeable
Less Capital allowances
Is there anything else to take into account or does anyone have another opinion on this?
I was involved in a discussion re CGT on holiday homes the other day and would like to see if your thoughts were along the same lines as mine.
Scenario is the house was bought as a holiday home seven years ago and now the owners intend to sell their principal residence and move into the "holiday home" for a year before selling up to buy a bigger house.
They are under the (wrong?) impression that if they live there for a year then they are exempt from CGT.
I have explained that they will automatically get 36 months relief if they live there for any length of time as PPR but the rest of the gain would be chargeable.
Workings would be
Gain x 36/total ownership = chargeable gain
Taper relief 70% chargeable
Less Capital allowances
Is there anything else to take into account or does anyone have another opinion on this?
0
Comments
-
Re:CGT on Holiday homes
Hi,
The gain is only wholly exempt if the owner(s) had been occupied for the whole period of the ownership.
In this case, where the owner(s)had only actually lived in that propery for certain period of time. the gain exemption will the Total Gain x (period of occupation/ total period of ownership)
to maximise the exemption, other than consider the 36 months, also the reasons why they weren't living in the property.... whether or not would be different because it was a holiday home, I am not so sure. (will come back on this, can't get my head round at the mo)
is that clear though, just finished this topic last night, fresh and not deep.0 -
Re:CGT on Holiday homes
I think that there would also be a letting exemption available. As the property has had actual occupation by the owner, as PPR, it should qualify for an allowance equal to the lower of:
the chargeable gain
the non chargeable gain
40,000
Also bear in mind that if the property is owned jointly by husband and wife there are two letting exemptions. Each would be judged on their share of the gain and allowances apportioned but the 40,000 does not get halved.0