I have been letting my home to lodgers on and off for a few years to friends for no profit or a considerably lower profit (30% -50% of market value). I don't consider it a business or a money making scheme but I want to know if HMRC would before I find another place and go bankrupt after I get a huge unexpected bill from them! For those years I shared my house would I be liable for capital gains tax?

I've owned the property for 7 1/2 years, I would say I've been on my own for about three years, one lodger for about two years and three lodgers for about two years. During the period of lodgers I lived there on and off (mostly lived there though) and I have always considered it my only home with all my things and mail going there (I haven't rented anywhere else). I would share when I had friends who needed somehwere to stay or when I have travelled for work purposes and two two month backpacking holidays.

It feels ludicrous if I had to pay because I would have been paying CGT for the only privilege of sharing my house!

  • 1
    Are you selling the home now? Was it your primary residence at the same time as your friends were living in it? – Vicky Apr 7 '19 at 10:43
  • yes, I'm planning on selling it. It has always been my primary residence as I've always had a room just for me and nobody else but sometimes I've let people stay there, taken some nominal rent and been travelling or working outside of the area on contracts / a little bit of short back packing too – atreeon Apr 7 '19 at 10:50
  • I've owned the property for 7 1/2 years, I would say I've been on my own for about three years, one lodger for about two years and three lodgers for about two years. The lodgers were always my friends though and over all this time paid around 30% of market value, sometimes 50% actually but I have only sometimes made a profit after the rent a room scheme and then that has never covered the time I have spent repairing and organising things for them and after them. – atreeon Apr 7 '19 at 10:55
  • 1
    Did you claim the rent on your tax return each year? – JTP - Apologise to Monica Apr 7 '19 at 12:10
  • 1
    @DilipSarwate The latter. CGT is not payable on your primary residence but if a property was only your primary residence for part of the time you owned it, CGT is payable when sold on the periods for which it wasn’t. – Mike Scott Apr 7 '19 at 13:13

You’ll be liable for CGT for any period when you had more than one lodger. The amount of rent you charged them and whether or not it was a market rent are irrelevant. Use the HMRC web site to work out your liability here.

  • it is as simple as that then, just the number of lodgers...not about the profit or the intention? Crazy, so I get taxed a high amount just because I share something. What if they only paid the bills? – atreeon Apr 7 '19 at 11:08
  • @orangesherbert Income tax is the tax you pay on rental profits, and the profit that you make is very relevant to your income tax bill. – Mike Scott Apr 7 '19 at 11:11
  • Thanks Mike, I asked a follow up question, basically is there any difference between a friend staying a couple of months and a lodger! money.stackexchange.com/questions/107465/… – atreeon Apr 7 '19 at 11:39
  • 2
    @orangesherbert As far as I know, if they weren’t paying rent then you weren’t renting out part of the property. But I’d check that with HMRC. – Mike Scott Apr 7 '19 at 16:58

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.