Q. I own two homes but am selling the main one. Can you advise how long I have to wait before selling the second one without having to pay capital gains tax on it?
A. The sale of a property that, throughout your ownership, has been your only or main residence should not give rise to any liability for capital gains tax. If you vacate that property before selling it, you are "credited" with living there for the last three years – whether in fact you actually lived there or not.
If you own another property that you have not used as your only or main residence, any gain you make on a sale will be liable for capital gains tax. If you use the other property for a while as your only or main residence, then a proportion of the gain will be exempt from capital gains tax, but not the whole gain.
For any property you own, in order to qualify for any degree of exemption as your only or main residence you must have actually lived in it. Further to this, only one property can qualify at any one time.
There is a way to elect which of two or more properties owned at the same time can be treated as the only or main residence. But this cannot be done retrospectively and, as the rules are quite complex, I would ecommend seeking advice from either a professional tax adviser or from HM Revenue and Customs.
Q. As part of getting my husband's business refinanced, the bank is insisting on us taking out a second mortgage for our home, which we own jointly. I understand the risks but my husband assures me the business is sound, which I absolutely accept. However, the solicitors dealing with the restructuring say I must take the mortgage papers to another solicitor for independent advice. I have contacted another solicitor who wants to charge me a fee which is disproportionately large given that I am happy with the whole process. Can I refuse to see the other solicitor and save money?
A. Yes – you can refuse. However, the bank may not be prepared to complete the restructuring if you do so. This is because if you do not take independent advice, you may be able to allege, at a later date, that your signature was obtained by unfair pressure and the mortgage would be unenforcable against you.
Your own solicitors are acting for your husband (and probably the bank) and there is a conflict, which means they cannot advise you. The independent firm must check that the business is sound.
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