I currently own two residential properties. Property 1 was purchased by myself 16 years ago and was where I lived. Two years later, I got married and purchased a second residential property with my wife, which we both moved into, and it became our main residence (under joint ownership). I kept property 1 for my mother to stay in rent-free. If I decide to sell property 2 (my main residence) and move back to property 1, will I pay any capital gains tax (CGT) in the future (e.g., in five to ten years) if I decide to sell property 1? I want to know whether, should you sell your main residence CGT-free and then move into your second property so that it becomes your main and only property residence, you still have to pay CGT on it if you sell it in (say) ten years’ time. 

Arthur Weller replies:  

I presume that you did not make any election or nomination for which house should be your principal private residence (PPR). See HMRC’s guidance in its Capital Gains manual at CG64545 (https://tinyurl.com/bdzz53nu). It appears that property 1 was your main residence from 2006 to 2008, and then property 2 became your main residence from 2008 to 2022. If you sell property 2 now, you will have no CGT liability because all the capital gain will be exempt due to PPR relief. If you then move back to property 1, make it your main residence, and then sell it in (say) 2026, having owned it for 20 years, you will be subject to paying CGT on (14/20) of the capital gain (for the 14 years that property 1 was not your PPR), and you will be exempt from paying CGT on (6/20) of the capital gain (for the six years you actually lived in the property).