UK Landlord Forum / Life

Hi Everyone

I'm trying to ascertain whether I'm liable for Capital Gains Tax....

I lived in my house in South East London for 20 years and then, due to the sudden death of my husband and heart failure on my part, I went to live with my Sister in Somerset, I rented out my house from January 2020 onwards. The tenants are still living in my house but have not paid any rent since July 2021.

The tenants were served a Section 8 notice for rent arrears and the hearing is due to take place on 27 September 2022. Due to the non-payment of rent, I was put under such significant financial stress that I decided to sell my house.

The tenants, in a surprise move, paid me one month's rent on 20 September 2022 (1 week before the hearing).

My house went on the market on 13 September 2022 and it sold on 21 September 2022.

All being well, my hope is that the Judge grants me back possession of my house on 27 September 2022 and then the Bailiffs evict my tenants within one month.

As soon as the tenants are evicted, my plan would be to sign back up for council tax and utilities until exchange and completion.

Would the above scenario still require me to pay Capital Gains Tax?

Thank you very much in advance for your valuable advice.

You have to pay Capital Gains Tax on any capital gain, including a gain on property.
There is an exemption for property you own that you live in as your main or only residence.
You take the gain over the whole period of ownership and divide it between when it was your residence and when it wasn't, with nine months being taken from the "when it wasn't" total and added to the "when it was your residence" total.

So you will have 22 years of gain, but only the period from January 2020 to disposal (less 9 months) will be taxed.
You have a tax free allowance of £12,300 of the taxable gain.

There isn't much chance the bailiffs will evict the tenant within a month (the possession claim granted has at least 14 days to be effective and most courts are running way slower than that).
But it takes much much longer than a month to do the basic searches for a house purchase.