Do I pay capital gains tax if i rent my out my existing home while waiting to sell

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mikey12

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I have built a new house and ready to move in but not having sold my existing house in the curent market im thinking of renting it for a year or two until the market picks up again, but does that make me libel for cgt. when i eventually sell my existing home
 
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Re: capital gains tax

You can hold on to your first house for 12 months after you move to another and not be charged CGT if you sell within those 12 months. I believe you can rent within those 12-months without attracting CGT (but you will have to pay tax on rent). If you sell after 12 months and rent out in the meantime, the proportion of time you own the house after that 12 month period will be used to pro-rate the amount of CGT you pay on a subsequent disposal. The calculation is on a straight line basis (so total years of ownership divided by period as PPR + 12 months is CGT-free). The value of the property when you rent it out or after the 12-month period after you move out is irrelevant - the calculation is done based purely on period of residence (+12 months) vs. period that it is an "investment" property. There are numerous threads on this topic so do a search if you need further info.

Sprite
 
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