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In the middle of another post PB explained his proposal to move into each of his rental flats before selling same thus declaring each as his principal private residence and avoiding CGT. The first HMRC will allow, the remainder I wonder if their super computer will pick up but that is not the reason for posting.
To satisfy the HMRC that this a genuine move the owner will need to change the address on all documentation including the lender on the rental property which has become the new principal residence. My query is, will the lender allow a change from BTL mortgage to owner occupier, will the owner meet the criteria for one and what will the be the lender's view when he redeems early on 4 mortgages? As PB has said in the past, you don't want to get on the Hunters List.
For this to be even partially viable - each of the properties has to have been notified to HMRC (within 2 yrs of acquisition) as the new PPR.
That PPR election can be changed the very next day (eg back to actual PPR) - but does allow the property to be later elected again as PPR with the benefits deriving from that.
The rules on this have changed - cannot remember when but if anybody knows can they share please.
The PPR relief would only be for the time that the property was lived in with the period it was let subject to CGT – plus lettings relief plus last eighteen months..
Agreed, unlikely to fully exempt the gain.
Director of Tax Peplows Limited
CTA ACA FCCA
Vaguely recall that CGT relief is for 3 yrs of total ownership period - for even a short period of actual occupation
Changed to 18 months in April 2014 (if I recall correctly)
Iam the Law PB will be using clever grey areas and will not inform any BTL lender or wait till unencumbered. ( I'm sure he will clarify his strategy )
Wisdom involves an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs.
If you sell your main residence and then move into a former BTL (ignoring mortgage types) and live their for a while, then surely it is a matter of fact that the former btl has become your main residence for the period that you are there.
It may also be the case for a lot of portfolio landlords that a lot of their btls were also their main residences in the past. I know it was a deliberate policy of mine to buy a place, live in it for a while and then move on to a new house, remortgaging the original and converting it into a buy to let. That was known good tax planning.
Another summary of the case.
I was sceptical regarding the CGT angle but was interested if PB or others had considered the finance side of the set up.
For the record, I have no personal use for the scheme, if it did work.
As far as I am aware
The CGT situation gives you £40000 lettings relief along with the annual CGT allowance plus any gain made in the 18 months before sale.
Well most of my flats won't have gained that much anyway!
Plus I have grey circumstances where it is perfectly possible that my official living circumstances can be evidenced by all the usual proofs.
I will be occupying officially for about a year before selling each flat
It can easily take 6 months to sell a property.
So officially move in
Start to market property after about 6 months to complete after about 1 year
Lender has no interest which address I use.
They just want their money back.
But if I sell where I am then I will have to move to each flat in turn which will mean removing tenants.
I don't want to do this but S24 and other issues are leaving me no alternative.
Based on current prices most of my supposed gains could be covered within the annual CGT allowance.
Prices are rapidly falling
A 3 bed house I have been monitoring has reduced from December last year from £350000 to £315000
Mind you it is of 1950 concrete construction!
Perhaps that is why it isn't selling.
Ex- council I believe
CGT will be the least of our worries.
I just don't want a S24 Albatross round my neck!
Prices seem to be softening.
There doesn't seem to be much supply
Been looking for 3 bed houses within 1 mile of B Stortford town centre
Only 12 on zoopla under £375000
Admittedly haven't checked RM or OTM yet but even so there is a dearth of affordable property
But what there is seems to be reducing every month
A great time to be a buyer if you after a home
Not so great if you are investing.
Well I'm trying to do both with one property.
Even now 3 beds are about the max I can go for and that is only if I sell up everything
I don't want to kick out two lots of decent tenants who want to stay for at least the next 4 years.
But if push comes to shove I may have to s21 them albeit very reluctantly.
That is what Osborne has done to me!