Taxation On Property

[waterbitch]

I have a house that we rent out,it is our only property(we live in rental at the moment) and when the current tenant moves out we wish to sell it and buy somewhere else for us to live in,
We have been told we would have to live in it for a year before we sell or we will be taxed on the rise on it's value while it was rented,I thought as it is our only house this didn't apply.
is there anyone who could clarify this for us please

[Peter Pedant]

erm because you get tax relief on your main residence and this clearly isnt your main residence

and yes you would pay CGT on the rise in your house - however you can give your dear spouse an equitable half share and so there are two lots of capital gains relief of £10k each

how long have you let it for ?
I think if it less than three years then the CGT is zero so long as you had it as your main res up to that time

[waterbitch]

we are not actually living in a house,we are renting/borrowing a friends canal boat that has no residential address,so does this class as a main residence,the reason we are on a boat is to up our income re;the house but age is now a barrier and we need to settle

[Skyline D]

Doesn't matter if you chose to live rough on the streets, the fact is you are not living in the house in question so it's not exempt.

The three year exemption Peter refers to is now 18 months.

To calculate the taxable gain add the number of months you lived in the property to 18 and divide by the number of months you owned the property and multiply the gain by that fraction. This will give you the tax free gain. The rest is taxable. So if you lived in it for 12 months but have owned it for 48 months then 30/48ths (5/8ths) would be tax free and 3/8ths taxable, though of course the CGT exemptions would come into play too.

[Peter Pedant]

thx skyline

I find tax changes hard to keep up with - do you sleep with Tolley under your pillow ?

[waterbitch]

ok, so if we moved back into the place before selling how long would we have to live there so we wouldn't have to pay tax
Thanks for the help so far by the way x