Capital Gains Tax and Foreign students
As we all know, your main residence is free form CGT if you live in it as your main or only residence.
I am trying to determine the CGT status if my wife and myself let let a couple of bedroooms to foreign language students or young people who come to the UK and require “homestay” accommodation.
I have been advised (not by Inland Revenue) that CGT would be payable on the sale of the house but I am far from convinced.
I would expect to pay CGT if I created a self contained flat within the house and let that on a AST or took a lodger but I just don’t understand the situation with homestay accommodation.
Does anyone have any knowledge or experience?
Thanks
Chris
5 comments on this article
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Member Since January 2011 - Comments: 12255 - Articles: 1477
11:12 AM, 15th June 2015, About 11 years ago
Hi Chris
I think you have been badly advised and that CGT is NOT payable under these circumstances.
Also, as a resident landlord, the first £4,250 of rental income from lodgers is tax free, regardless of any other earnings. See >>> https://www.property118.com/rent-a-room-scheme-earn-4250-per-annum-tax-free/34756/
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Member Since March 2015 - Comments: 40
2:14 PM, 15th June 2015, About 11 years ago
I echo Marks’ comments.
I have had lodgers for years and the rent a room scheme and £4,250 is great.
Member Since July 2013 - Comments: 303
5:19 PM, 15th June 2015, About 11 years ago
Yes, its great, However it does not work in London as the £81.73 (£4250/52) is very low for London.
Member Since April 2014 - Comments: 22 - Articles: 2
6:06 PM, 15th June 2015, About 11 years ago
Reply to the comment left by “Mark Alexander” at “15/06/2015 – 11:12“:
Thanks Mark. Could you briefly expand a little as to why you think there would be no CGT? Thanks. Chris
Member Since January 2011 - Comments: 12255 - Articles: 1477
6:11 PM, 15th June 2015, About 11 years ago
Reply to the comment left by “Chris Unwin” at “15/06/2015 – 18:06“:
Yes of couse.
I’ve made an assumption that Chris would only take in one lodger into his home at a time.
Details of the Rent A Room scheme can be found on this .gov website >>> https://www.gov.uk/rent-room-in-your-home/rent-bills-and-tax (see the fifth heading “Capital Gains Tax”) copied below for convenience….
Capital Gains Tax
You may have to pay Capital Gains Tax when you sell your home if:
you let out all or part of it
you’ve taken in more than 1 tenant or lodger at a time
However, you may be entitled to Private Residence Relief and Letting Relief.
I have yet to come across a person who has had to pay CGT as a result of taking in foreign students as lodgers in their home, although it is theoretically possible that CGT might apply. If in doubt seek professional advice.
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