Munchkjn

Sold the house yesterday, so hopefully that saves a load of hassle. Cheers for the information though, it will be a handy reference for others.

LittleGreyCat

Still deep in the mire on this one.

It isn't clear if this applies if the property is rented out, or only if you have the property as a second home when you move abroad.

Useful link, though, thanks.

Edit: just read this little gem
"If you don’t have a letting agent and your tenant pays you more than £100 a week in rent, they’ll deduct the tax from their rent payments to you."
So - are your tenants expected to collect Income Tax and send the payments to the Inland Revenue?
Trying to get my head round the concept of someone, for instance on Housing Benefit, dutifully sending off the portion of the rent money which you should pay as tax directly to the IR.
Who is responsible if it doesn't turn up?

MrsFychan

"If you sell your home on or after 6 October 2016, to qualify for relief for each tax year after 5 April 2015:

you, your spouse or civil partner must have spent at least 90 days in your UK home during that tax year"

you need to click through on the links, so if you can't prove that, you are renting it out, you get no tax relief

Bermudashorts

If it does cost you dearly in CGT then it means you have made a handsome profit and are still better off for having kept it and paid some tax on the gain.

I would make the analogy that selling now to avoid future CGT is a bit like turning down a payrise because it means your income tax will go up. Tax works on proportions and will only ever be a fraction of what you have made.

I would base the decision to sell on other factors. CGT on property is not the hammer blow people seem to think it will be.

No CGT is not on gains since the time you move, in that it isn't as simple as that. When you sell a property there is hopefully (but not always of course) a gain. The gain is sales proceeds less what you paid for it. If you have lived in the property the whole time or have declared it your primary residence then none of the gain is chargeable to tax because there is primary residence tax relief against your gain.

If you have rented the house out, then it cannot be deemed your primary residence as it needs to be available for you to live in. So in this case the gain (sales proceeds less what you paid) is prorated mathematically between when you lived in it and when it was rented out - you do not estimate a valuation for the point at which you started renting it out.

The prorated gain is further reduced by a couple of other concessions like letting relief and also you can claim the last 18 months as being your primary residence even if it were not.

Now that is the situation for residents, going forward it will be much the same for non residents, however historically non residents were exempt from CGT, the change occurred on 1 April 2015, so in fact if you were already overseas at that time, you would have needed to get a proper valuation on that date.


I am not sure when exactly you were resident non resident as 1 April 2015 comes into it and would effect things. But I would say neither of the above are true.

If you were UK resident throughout, the portion of the £150k gain that is taxable would depend on how long you lived in it versus how long it was rented out. Let's say you lived in house for the first 2.5 years and then rented it out.

Well the first 2.5 years it was your primary residence and then you can also claim the final 18 months as if it were your primary residence, so you can claim tax relief for four out of the five years you owned. Hence 1/5 of the £50k =£10k is the gain that is potentially subject to CGT - but remember there are still further tax reliefs that come into it.

If you are non resident you would need a valuation dated 1 April 2015. And the gain that needs to be considered is the one since that valuation, a valuation on the date you left the country is not relevant. If you did not obtain a April 2015 valuation, then I would guess you have no option but to calculate in the same way as above.

I have probably not covered every single angle in this post as it is complex and rules changed and it depends on the individuals specific timings, but rather this has hopefully provided a broader understanding. My comments on UK side of things not NZ.

LittleGreyCat

Memo to self - get an April 2015 valuation now whilst the valuer can still remember 2015.

O.K. historical valuation can be done from Land Registry records, but knowledge of the location is important, and if not many properties changed hands in the immediate area around April 2015 then the valuation may be less than accurate.

Edit: need to check if an informal opinion from a couple of Estate Agents is sufficient, or if you have to pay a valuer.

Bermudashorts

I should think if it was not done at the time, it would be hard to get a valuation that has been backdated to be acceptable now. All non residents with UK property should have got their houses valued April 2015 - how HMRC expected people to know this, I do not know!

Unless as you say, some very similar properties in the immediate area exchanged hands around April 2015 then there would seem to be little chance of getting this done now.

LittleGreyCat

Well, as we are still in the UK we can go and lean on an estate agent or two.

Pretty straightforward to say "What is the value now, what was the %age increase over the last year, extrapolate back. "

Much harder to do if you are asking them to think back 7-10 years.

JC3

This link should also help you with regards to Capital Gains Tax:

www.gov.uk/tax-sell-home/absence-from-home

JC3

LittleGreyCat

"The rules are different if you’re not UK resident for tax."

jmh

An estate agent valuation would be good because it should be higher than the sale price would be in most cases. Then when you do sell, the difference between the agent valuation and the sell price should be less - hence less tax. Can you use an agent - that option would be open to fraud, I would think.

JC3

That's true, but please note both sets of rules can be viewed via the link provided.
JC3

janiejones

We sold our house two weeks ago, and did the CGT refurn the same week. If you didn't have a valuation on 1 April 2015, you can time apportion the gain.

I'm not a tax accountant, but there is quite a bit of misinformation floating around this thread. Follow the links provided, HMRC have upped their game on providing advice, and their website is very clear on how to calculate any gains.

LittleGreyCat

I find myself chasing my tail. Each page seems to have an additional bit saying something like "However, see...." and after a few pages you are back where you started. Not helped by a new load of pages all in Beta when you start trying to chase down the correct contact.

I am preparing a comprehensive list of questions, and trying to track down which bit of HMRC I should send the details to.

If/when I get definitive answers I will report back.

MrsFychan

I think letting agents/estate agents/cnveyance solicitors should know the answers

jmh

I definitely would not take tax advice from an agent. A solicitor maybe if they are a specialist.