Classic Rock Posted April 10, 2012 Share Posted April 10, 2012 I have a friend (no, it's not me!) who owns a house outright which they rent out. They also have a house they live in which has a mortgage on it which they have been in for about five years. They are considering selling the rented out house but have heard they will have to pay capital gains tax on the sale price. They've heard that if they put their name on the Council Tax and utility bills for six months the house will be back in their name again and they'll be able to sell it without paying the capital gains tax. I'm totally out of my depth and can't advise. Is this true? If not, is there a way round paying capital gains tax? I know this has been discussed on threads a couple of years ago (I searched) but laws change and so do loopholes. Link to comment Share on other sites More sharing options...
Ghostrider Posted April 10, 2012 Share Posted April 10, 2012 From the HMRC website : Property - including land, buildings and leases Most property is liable to Capital Gains Tax. You must work out the gain or loss if you sell or dispose of it. Types of property liable to Capital Gains Tax include: a second home a property that you've rented out business premises, such as a shop or a farm land, such as agricultural land However, if you sell your main home - even though the asset is liable to Capital Gains Tax - you may qualify for Private Residence Relief. This may mean there's no tax to pay. However, im sure there will be some financial wizard along shortly..... Link to comment Share on other sites More sharing options...
Strix Posted April 11, 2012 Share Posted April 11, 2012 How long have they had the owned outright property? The way property prices have gone, they may not be due to pay capital gains anyway, as you only pay the tax on the increase in value, not on the full value this might be useful to read too: http://monevator.com/2010/03/15/avoiding-capital-gains-tax/ Link to comment Share on other sites More sharing options...
Classic Rock Posted April 11, 2012 Author Share Posted April 11, 2012 I think she has had the house since the mid 90s. It has nearly tripled in value since then. The guide above is interesting but mainly advises on lower values. So my original question remains...can she put the bills in her name so it appears that its her residence? Link to comment Share on other sites More sharing options...
Strix Posted April 11, 2012 Share Posted April 11, 2012 I'm not certain on this, but IIRC, when my mum looked into this when my dad was working from home (which would render part of the property subject to capital gains tax under certain conditions) the time frame was 3 years, not 6 months as fully residential Link to comment Share on other sites More sharing options...
Jeffrey Shaw Posted April 11, 2012 Share Posted April 11, 2012 Best: speak to a tax specialist (Chartered Accountant?) That's the best way to minimise/avoid- lawfully- some/all of the CGT. Link to comment Share on other sites More sharing options...
daniel3982 Posted April 11, 2012 Share Posted April 11, 2012 Or consult your local MP, they had lots of experience of flipping their second homes and avoiding capital gains tax, the best thing of all is they were doing it with "expenses" that we paid them! Link to comment Share on other sites More sharing options...
Classic Rock Posted April 11, 2012 Author Share Posted April 11, 2012 Are there any Accountants on here who may know? Link to comment Share on other sites More sharing options...
little-nat Posted April 11, 2012 Share Posted April 11, 2012 How about this for some advice to give your friend PAY THE TAX ,sounds as though they have made a shed load anyway.and some moral advice to you, would you ask the same question if your friend was asking how to screw the benifits system ? Don't get me wrong I also dislike paying my tax but that's life. Link to comment Share on other sites More sharing options...
MZ2832 Posted April 12, 2012 Share Posted April 12, 2012 Your friend will need to take professional advice. On purchase of a second house I believe that the owner has up to two years to declare which is their primary residence otherwise the tax man will make a decision. Link to comment Share on other sites More sharing options...
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