Capital Gains Tax and Foreign students

by Readers Question

11:09 AM, 15th June 2015
About 6 years ago

Capital Gains Tax and Foreign students

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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” accommodationCapital Gains Tax and Foreign students

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?



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Mark Alexander

11:12 AM, 15th June 2015
About 6 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 >>>

James dengel

14:14 PM, 15th June 2015
About 6 years ago

I echo Marks' comments.

I have had lodgers for years and the rent a room scheme and £4,250 is great.

Shakeel Ahmad

17:19 PM, 15th June 2015
About 6 years ago

Yes, its great, However it does not work in London as the £81.73 (£4250/52) is very low for London.

Chris Unwin

18:06 PM, 15th June 2015
About 6 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

Mark Alexander

18:11 PM, 15th June 2015
About 6 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 >>> (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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