1st time buyer rents apartment

M

martin m

Guest
Hi,
1st time buyer has to rent out apartment.
They don't live in it. They rent it out within five years of living in it say 4 and quarter years. What are they liable to?
1. Losing the TRS
2. Paying Capital gains Tax
Anything else?
 
martin m said:
Hi,
1st time buyer has to rent out apartment.
They don't live in it. They rent it out within five years of living in it say 4 and quarter years. What are they liable to?
Click to expand...
When did they rent it out? The stamp duty clawback period was 5 years but changed to 2 years in the last budget. Under the clawback scheme a property originally purchased as an owner occupied PPR which is rented out within 2 (was 5) years of purchase means that the owner must pay the investor rate of stamp duty on the original purchase (net of any SD already paid id any)/
1. Losing the TRS
Click to expand...
The time limit is irrelevant here. Once a property ceases to be an owner occupied PPR one can no longer claim owner occupier mortgage interest relief.
2. Paying Capital gains Tax
Click to expand...
If the property is retained for more than 12 months after vacating it as a PPR then some portion of the total capital gain over the ownership period will be assessable for CGT.
 
You state this:
They don't live in it.
Click to expand...
If it wasn't their principle private residence then they owe stamp duty (forget claw back).
 
Missed that. If they were never an owner occupier then they are de facto an investor and that has implications for stamp duty (they are liable for the investor rate if they did not pay this already), mortgage interest tax relief (they should not be claiming it as non owner occupiers), CGT (they will be liable for it on the full gain unless they even occupy the property as their PPR), etc.
 
martin m said:
They don't live in it. They rent it out within five years of living in it say 4 and quarter years. What are they liable to?
Click to expand...
My reading of this was that the "They don't live in it" was tied to the hypothetical renting scenario.

The second line would suggest the the person is vacating the property to rent it after having it as a PPR for 4 and 1/4 years.
 
Satanta said:
My reading of this was that the "They don't live in it" was tied to the hypothetical renting scenario.

The second line would suggest the the person is vacating the property to rent it after having it as a PPR for 4 and 1/4 years.
Click to expand...

You're probably right.
 
What happens if the place is no longer your PPR and you leave it unoccuppied i.e don't rent it out until the clawback expires which will be in 5 months time? Are you liable to Stamp duty charges then?
 
JB1 said:
What happens if the place is no longer your PPR and you leave it unoccuppied i.e don't rent it out until the clawback expires which will be in 5 months time? Are you liable to Stamp duty charges then?
Click to expand...
No. But remember that the SD clawback period is 2 years and not 5 since Budget 2008 anyway.
 
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