Downletting could be the new downsizing, says ARLA

I don’t see how the valuations will help, unless my understanding of Capital Gains Tax is wrong.

As I understand it, you take the total gain over all the years of ownership then calculate the different relief – I did not find the HMRC manuals that hard to understand. (They were less complex then most computer programs I have to work on!, Just basic logic applying a set of rules that someone else have dreamed up.)

My understanding (and I'm happy to be corrected) is that the CGT (Capital Gains Tax) clock starts ticking after three years of ownership. This being the case, my logic for getting the valuations on day one and the third year anniversary is to establish a base price if you decide to sell subsequently.

My understanding Mark is that the capital gains clock begins to tick the day that you let your prime resisdence. When you eventually sell the property you can take 36 months as a % of the overall number of years that the property has been let and apply that % discount to the gain. You can also take £40k (it may be more now) off the top of the gain the CGT is paid on the balance.

good way to start being a landlord is to sell your Prime residence and move into each house that you buy to let while it is being prepared, taking all the bills into you own name, including council tax (its worth loosing the relief) and stay there for about 3-6 months (there is no set amount of time) This establishes the fact that the property was once your prime and only residence. When you sell these properties you need to plan it to be over a period of years because the Tax Man may pay attention if not.

Alternatively if your holdings are set up as a limited company you can live in one of the properties that the company owns and pay tax on the "benefit" The whole amount of the loan to buy is tax deductable as are the ongoing repairs and replacement costs. You can give shares to your chosen ones up to the gift tax allowance each year. With some careful planning you can pop your cloggs with little or no inheritance tax or running costs on what is afterall your prime residence.

Taking the ARLA idea forward a person coulld set up a limited company and "sell" their prime residence into the company, using some of the legitimate tax rules it could work really well.

What a fantastic tax planning opportunity Mary. I lay a bet that several decent accountants, IFA's and Estate Planners have not thought that one through.

My parents came up with a strategy a few years back when they decided to downsize their portfolio. They moved into their buy to let properties for a year or so then sold and moved into the next one. They've done it twice now. Not a big portfolio but the Tax man seemed happy enough with the arrangement.