Can we move into our HMO?

Can we move into our HMO?

16:03 PM, 24th May 2022, About 3 months ago 11

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My wife and I were wondering if we moved into our HMO, by not taking in a new group of students and paying the HMO mortgage off with the sale of our residential property and using what was the HMO as our new main residence?

We own the property personally (not a limited company) We have had it for around 20 years.

If we could move into it as our main residence we were wondering if we would have a capital gains tax liability, for the years it was an HMO.

Any advice in this area would be much appreciated.

Stephen

Editor’s Note:

PPR relief calculator >> https://www.gov.uk/tax-sell-property/work-out-your-gain



Comments

Neil Patterson View Profile

16:06 PM, 24th May 2022, About 3 months ago

Hi Stephen,
You pay CGT when you dispose of the asset, but as it will be your new main residence, depending on how long you live in it there will be PPR relief to calculate offsetting the final CGT bill.
I have included above the HMRC calculator for this but at the moment it is an unknown variable.

Stephen Johnson

16:14 PM, 24th May 2022, About 3 months ago

Hello Neil,

Thank you very much indeed.

Stephen Johnson

David

16:19 PM, 24th May 2022, About 3 months ago

Check with the planning dept whether they will give permission to change use class from c4 to c3. Some Councils refuse if their policy is to retain HMO stock.

Stephen Johnson

16:23 PM, 24th May 2022, About 3 months ago

Thank you.
Stephen

Theresa

13:11 PM, 25th May 2022, About 3 months ago

Yes there will be a CGT charge when you sell related to the period prior to moving in. Have ever lived in the HMO previously? That will affect calculations and available relief. You can read up on how to calculate PPR relief in the HMRC manuals or get advice from a tax advisor.

Stephen Johnson

13:20 PM, 25th May 2022, About 3 months ago

Hi Theresa,
Thank you for your guidance.
Stephen

treeman

10:05 AM, 26th May 2022, About 3 months ago

I have found that the councils do not wish to have HMOs anymore and will take if off the register but very hard to put them back on
I sold a two HMOs as HMO and it was a bugger to get the council to admit that they were HMOs as I di not get planning 30 years ago when I built them and once the sale went through the council would not admit it even though they were paying the rents for all the flats for years, they wanted tenancies going back ten years and rent payments proving for ten years, on one tenancy the flat number was not listed so they state that this tenant had in fact rented the complete house and therefore the HMO was cancelled, but they did not win, with all the proofs I had, Leeds by the way

Stephen Johnson

12:07 PM, 26th May 2022, About 3 months ago

That doesn’t sound like the council 😉.
Thanks for the info
Stephen

David

16:56 PM, 26th May 2022, About 3 months ago

Reply to the comment left by treeman at 26/05/2022 - 10:05
That's not universally true. It depends on yhe Council. There is a case on the NRLA forum at the moment about a Council that has refused to change it from planning class c4 as they wish to retain all their HMOs.

Stephen Johnson

18:40 PM, 26th May 2022, About 3 months ago

Hi David, yes I can see how that would be the case. Fortunately Brighton, as I understand it want more private housing and will allow it, if indeed we end up doing it.

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