Move from OOR to IP - tax implications

Hi,

I would appreciate your help with the following question.

I have lived in my first house (OOR) for almost 6 years. I also have IP that I bought two years ago. If I move to IP and make it my primary residence for a period of say 12+ months and sell it after that (whilst renting out the OOR) will I be eligible for not paying CGT for the IP? Thank you.

 

If your IP was rented from the time you bought it, you will always have a cgt liability. If you move into it and claim it as your PPOR, that time will not attract CGT.

If you sell, you will have to work out the time rented and the time your PPOR. If you rented for 24 months, then PPOR for 12 months, cgt will apply to 2/3rds of the capital gain, discounted by half for the fact it was owned for more than a year.

However, your previous PPOR will be subject to cgt from the day you move into your IP and claim it as your PPOR as you can only have one at a time.
Marg

 

No

 

You may have to make a CGT main residence election. Choosing the exempt 12 months on the Ip would only ever be pro rata. You cant treat the Ip as exempt if you never lived in it for the first 2 years. The other choice is to treat the IP as taxable and allow a full exemption for your home. Its a guessing game as you wont know until much later. Run the numbers with tax advice and it my be quite clear

 

Thank you very much for your explanations.