Capital Gains Tax

[Pumpkin_spice]

I owned a flat back in 2005 (which I lived in). I then purchased another property that was inhabitable and was in need of renovation (which I done). I then sold the flat and moved into the property that was renovated.

I have now just received a letter from HMRC regarding Capital Gains Tax. Am I liable for this as I live in the property plus the property has not been sold?

 

[AndrewEardley]

From what you have said, it doesn't sound like you have a liability YET

The sale of property 1 (the flat) was made with you having lived in it the whole time; and therefore is exempt from CGT as it was your main residence.

Property 2 where you now live cant have a liability yet as it hasn't been sold. However when you do come to sell it, I believe you could have a liability for the period from when you bought it to when you actually moved into it. They cant charge you this until disposal of the property as they don't know the gain you made.

That's my understanding anyway, but IANAL

 

[David Griffiths]

More information on dates and other matters is needed

When did you buy property 2? When did you move in? (That's presumably the same date that you moved out of the flat) When did you sell the flat?

Which tax year and which property are HMRC asking about?

Did you ever advertise the new property for sale before you moved in? That could cause complications.

Did you ever lodge an election with HMRC about which property was to be treated as your main residence?

 

[Pumpkin_spice]

They don't state a tax year on the letter.

Purchased the second property Aug 2004 but did not move in until Feb 2006. Sold the first property Jan 2006.

 

[Mitchells Bristol]

Hello there

Coule you post to the forum the content of the HMRC letter?

 

[Pumpkin_spice]

July 2013

On 5th March we launched the property sales campaign which is aimed at people who have sold residential properties, in the UK or abroad, where Capital Gains Tax should have been paid on gains made I am writing to you because our records show that you may have disposed of a property which is liable to Capital Gains Tax.

Then goes on to what you should do now etc

2nd letter

Oct 2013

Basically says that they cannot be certain that the property held was exempt from CGT or that no CTG was payable

 

[David Griffiths]

Does their letter contain any specific question, or do they just state that they cannon be certain that it's not liable to CGT?

If it's the first, then answer the questions, if the second ask them what information they are looking for.

Very difficult to advise on the basis of incomplete and piecemeal information

 

[teddys]

HMRC have been running a targeted campaign against property owners. The letter you have received may be a general one. However, to get any help why don't you put the contents of the 2nd letter on here, as taxonomy suggests

 

[DoIt]

The letter reads...

"From our records we hold we cannot be certain the property you disposed of was exempt from CGT or that no CGT was payable because any gain was covered by allowances or expenses. We are writing again to ask if you could now make contact with us to tell us what we need to know."

Concludes with:

"We do need to know more about the proprty disposal, so if we have not heard from you within 30 days of this letter we will need to take action..."

You do not usually need to communicate with HMRC if CGT is not incurred. This letter, however, gives you little choice.