UK Landlord Forum / Life

I rent out a few flats in Battersea but this question relates to my own house.

In share with two lodgers in my 4 bedroom house and have asked on numerous internet sites if that will result in a capital gains tax bill when I sell.

The typical answers In get back are:

(1) From lots of people who have looked at the HMRC advice
Yes if you have more than one lodger as per HMRC opinion

(2) From lots of tax accountants
Although HMRC believe you will have a CGT liability if you have more than one lodger we belive this is not the intentiaon of the legislation.
They hint that they could act for me (I pressume for a fee) if I wanted to challange the HMRC view

'-----------

Anyone know for sure?

I know quite a few people who do the same as me and though pay tax on the income they either have not or have no intention of telling the revenue when they sell of any capital gain

I think that the CGT liability is exactly what the purpose of the legislation is ... the tax man will argue that, with more than one lodger at a pop, you're running a 'lodging business' and that the purpose of part of your home is therefore for trade. This means that the rooms your lodgers rent from you will be exempt from lettings relief and private residence relief for CGT calculation purposes.

Sorry to say it, but I'm 99% sure there's going to be CG liability when you sell.

Oh, I should point out that the last 36 months of ownership also qualify for residential relief, even if you aren't living in the property or are using it for business, though you must have lived there at some point as your main or only home.

So if you take in lodgers for less than three years and then sell, so long as you were eligible for residential relief for the rest of the time you owned it, it will apply.