I own two rental income properties. My wife and I live in armed forces accommodation and my wife owns one rental property of her own. I am thinking about selling one of my properties to buy another higher value property. What would this mean for capital gains tax (CGT) purposes now and potentially in the future when my wife and I both own our own home that we live in? I am aware of the CGT exemption for selling your ‘home’; would this apply in this scenario? Further, if it does and I claimed the sale of this property was my ‘home’ to not pay CGT this time, how would it affect my wife and I when we do own our own house that we live in and then choose to move house?
Arthur Weller replies:
Principal private residence (PPR) relief from CGT is potentially available for someone in job related accommodation (see HMRC’s Capital Gains manual). However, one of the requirements is that the person intends to occupy the property as their main residence. This does not seem to be your scenario. So the sale of this rental property will be assessable to CGT in the normal way and any future home that you lived in as your main residence will be eligible for PPR relief.