I want to sell my UK home; can I avoid capital gains tax?

I’m a Jersey resident and hear that if I live in my UK house for a year, I don’t have to pay

Q I live in Jersey in the Channel Islands and am looking at selling a house in the UK that I have been renting out for more than 15 years. I have been told that if I were to live in my house in the UK for a year and then sell it, I would not be liable to capital gains tax. Or is it not that simple?
RW

A It’s not that simple. And even if you did move in – and you made it genuinely your main home rather than a temporary residence for the purpose of avoiding tax – doing so would only reduce the capital gains tax (CGT) bill by a bit rather than eradicating it entirely. Making an ex-rental property genuinely your home – and HM Revenue & Customs won’t just take your word for it – means that part of any gain you make when you come to sell will qualify for what’s called “private residence relief” which means that the gain that relates to the period of time that it was your home (or 18 months if this is longer) is tax free. To work out how much of the gain would be tax free, you take the number of months you used the property as your home (or 18 if greater) and divide this by the number of months you owned the property which gives you the fraction of the gain that is tax free. So in your case, assuming you sell after 16 years’ of owning and one year of living in the property, the fraction would be 18/192 or, to put it another way, less than 10%. It will be even less than that when the rules change on 6 April 2020, when 18 goes down to nine.

Continue reading...

from Property | The Guardian https://ift.tt/2Z1xXaW
via IFTTT