CGT on second homes
Most people who live in more than one home concurrently know they can nominate one of those homes to be their “main residence”, and hence be free of capital gains tax (CGT) for the period covered by that nomination.
Once made, the main residence nomination can be changed at will, and hence “flip” a particular home in and out of the CGT relief for key periods. A property that has been the main residence at any point in the period of ownership will also allow the last 18 months of ownership to be free of CGT. It is thus very important that the conditions for nominating a property are met in full.
From 6 April 2015 you will only be able to nominate a home as your main residence if:
- it is located in the same country in which you are resident for tax purposes; or
- you spend at least 90 midnights in the property in the tax year (or 90 days spread across all the properties you own in the country where the property is located).
If you are tax-resident in the UK but you want to nominate a property located in a country where you are not tax resident, you will have to meet the 90-day requirement for that overseas property. This condition will override any main residence nomination you have already made for that home.
Also from 6 April 2015 people who live outside the UK will have to pay CGT on gains they make on selling homes located in the UK. This will only apply to the gain accruing from 6 April 2015, but it could catch out British ex-pats who have retired aboard but who keep a home in the UK.
We can help you review which properties you can shelter from CGT, and which you may want to sell.