UK tax: How long do you have to live somewhere to call it your residence?

April 4, 2007 12:31 AM

UK Tax question: How long do you have to be resident in a house for it to be your residence, for the purposes of capital gains tax?

If you have not lived in a house for 3 years, you get taxed on the profit of the sale.

My question concerns what happens if you've not lived in it for 2 years then move back in for N months then sell it? Obviously, if N is very small it looks like tax avoidance. And presumably there's an issue with property developers owning 4 houses and moving from house to house. So there has to be a fact about this: I'm looking for a statement of the form 2.5 years out, 2 months in=bad, 2.5 years out 3 months in=good. I've tried to check the revenue website for this information but it's not easy to find stuff on there.

posted by handee to work & money (3 answers total)

Looks like it's complicated and tax relief is calculated on how long you lived there for:

http://www.hmrc.gov.uk/pdfs/1999_00/helpsheets/ir283.pdf (PDF link)

The PDF gives some worked examples.

Any accountant will know about this.
posted by humblepigeon at 1:13 AM on April 4, 2007

the last three years are automatically counted for PPR purposes as long as you have used the property as principal private residence prior to moving out.
posted by koahiatamadl at 5:03 AM on April 4, 2007

Here is a more up to date version of the HMRC help sheet

http://www.hmrc.gov.uk/helpsheets/ir283.pdf

There will be a new one for the tax year 2006/2007 available on Friday 6 April

As koahiaamadl says the last three years are always exempt provided the property has at some time been your principle private residence. There are additional reliefs available to cover some periods of absence and periods when the property is let
posted by Barson at 5:28 AM on April 4, 2007