Can you avoid CGT on a second home by not letting it out?

[Lance]

I have a friend(!) who has a second home, however is not letting it out. To avoid CGT. Is there any truth in this?

Nope.

[Troll]

The private residence relief only applies for the years you lived in the house plus the last 18 months of ownership even if you didn't live there. Therefore, even if the second home is switched and it is now the main residence, the relief will be restricted to the number of years lived in the property so that there will be a gain which can be reduced by PRR based on the number of years lived in the property.

So what happens in the case where you part inherit with siblings the ancestral mansion - you lived there until the early 80's bought your own property in the interim and now just want to sell after the last parent has passed & it's never been rented
Do you calculate the CGT - from when you left home or from when the parents bought the property?

[northernladuk]

You lived in your parents house. Isnt that completely different to it being yours?

[Chart Accountancy]

So what happens in the case where you part inherit with siblings the ancestral mansion - you lived there until the early 80's bought your own property in the interim and now just want to sell after the last parent has passed & it's never been rented
Do you calculate the CGT - from when you left home or from when the parents bought the property?

The property will be included in the parent's death estate at market value, so that acquired at death at the market value. This will be your main residence so that it will be covered by the PRR so no CGT if you lived there until your parent died. However the second property will not be covered. When you purchase your second property, you can make election for it to be treated as your main property, in this case the first property will not be covered by the PRR when sold. If you left the property and lived in your own when you inherited the property from your parents,then this will be subject to CGT as when acquired it will be your second property and not your main residence.

[WordIsBond]

I have a friend(!) who has a second home, however is not letting it out. To avoid CGT. Is there any truth in this?

Q: I have a friend who has some talent, but is not using it to work. To avoid VAT. Is there any truth in this?
A: Yes, actually. Since he doesn't work, he has no money, so buys less stuff, so doesn't pay much VAT. A brilliant move on his part, and HMRC can't do a thing about it.

[Troll]

The property will be included in the parent's death estate at market value, so that acquired at death at the market value. .

Slightly more complex than that as at first parents death in 1996 1/2 was transferred to the children

This will be your main residence so that it will be covered by the PRR so no CGT if you lived there until your parent died
.

No I left home in the 1980's and bought own property

. However the second property will not be covered. When you purchase your second property, you can make election for it to be treated as your main property, in this case the first property will not be covered by the PRR when sold.

OK but my current house is my main residence

If you left the property and lived in your own when you inherited the property from your parents,then this will be subject to CGT as when acquired it will be your second property and not your main residence.

That's the bit I'm trying to work out the CGT on - so it will be based on the Market value at time of first parent death (1996) when 50% was transferred to the children and time of sale plus? value of second parents 50% between his purchase in 1965 and death? or is his 50% not applicable for CGT?

[BrilloPad]

Even if it was possible, it seems pointless to lose out on rent to avoid paying tax.

If it were possible, it might be worthwhile. CGT is calculated from when you bought the property. So in her case 1992. House prices increased exponentially since then. A shame its not the house price from when she moved out.

Q: I have a friend who has some talent, but is not using it to work. To avoid VAT. Is there any truth in this?
A: Yes, actually. Since he doesn't work, he has no money, so buys less stuff, so doesn't pay much VAT. A brilliant move on his part, and HMRC can't do a thing about it.

Not a good comparison.