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main residence relief

a client has bought another house with the intention of moving there once the main resdence is sild.  Is there any time limit that the main resdence should be sold? The client is still living in the main residence and will do so until it is sold.

If they decide to rent it out and move to the new house what is the tax consequence and how will the capital gain tax if any would be calculated

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Depends
If we are only talking about renting for last 18 months of ownership then as the law stands today no capital gains as the last 18 months are exempt if the house was previously PPR.

After this the property becomes pertentionly liable but you should research 'letting relief' which will probably help to keep the gain below the annual exemption,

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New house

What is he doing with this at the moment?

 

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CGT on old house

Yes, the last 18 months will be exempt assuming:

a) he lived there long enough for it to qualify as a residence,

b) there was no other property that either was or could have been his or his wife's main residence for the whole period he owned it, and

iii) if there was, he/they made the necessary election within the permitted 2 years, or

iv) he/they didn't need to as it was without doubt his/their main residence anyway.

He will also get letting relief if he rents it out (to the extent it doesn't overlap with the last 18 months, although some experts point to loopholes in the law that indicate you can).

Basically, he will only pay capital gains tax if the non-exempt part of the gain (pro-rata the whole period of ownership) exceeds £40,000 (or the exempt part of the gain if this is lower) and his annual CGT exemption in the year of disposal.

However, your client should also consider the CGT position on the new house. He may be able to rely on Extra Statutory Concession D49 to establish residency from the date he bought it if the old house has been on the market since then. Please see CG65003 for full details.

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The OP says that...

"The client is still living in the main residence and will do so until it is sold." which I presume refers to the original property not the new one. It therefore seems that there is no issue with the old as it will always be PPR until sold.

The issue will be with the new property that he does not live in initially, and while he still has a PPR.He will have a potential liability on ultimate disposal of the new property for the non PPR period of ownership in the opening years

EDIT: so far as the second part of the OP is concerned - letting the original house / PPR and moving to the new house - then the consequence is as stated by the other posters. He will have the final 18 months ownership added as deemed residence to the period of actual use as a PPR to give the exempt portion of the gain. If the property is let for more than 18 months then in addition he will have the letting exemption available to him, which is the lesser of:

£40kThe gain relating to the let period; otthe PPR relief due

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