A potential new client I met this morning has fallen out with his old accountant (fees - they have set a minimum £750 for a tax return (all clients with £+++ for additional pages) when he previously paid £350 ish !) so when I say fallen out I mean decided to switch and so I am one of three being beauty paraded.
One thing he has been advised to do and is in the process of doing is moving house into his investment property to save CGT. He naturally asked me my thoughts and said he would not do it if I thought he shouldn't.
Basically, he has been advised to move out of main home (£500k value purchased for £100k 20 years ago) into rental property he owns two miles away, (£300k value, purchased £100k 7 years ago) for 2/3 years. (Client is happy to do this, has no kids etc) and then move back and hold onto both - in the interim letting out the former main home on a commercial basis.
The reasoning being that he would significantly reduce the CGT liability on investment property (2/3 years residency plus final three years deemed) and benefit from lettings relief, whilst not paying any CGT on main home when sold as lettings relief would cover the 2/3 years out of 20+ when the property was let out
I can see no problem with this and told the chap I wanted to double check any HMRC restrictions on this before advising fully (if he engaged me only of course.....) but it seems this switch could save £40k in CGT......
Any immediate observations in case I have missed anything would be most welcome.
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