Firstly, you’re right- you don’t tend to pay tax on your home due to Private Residence Relief (PRR).
If you’re going to rent your bachelor pad out, then you will pay tax on the rent received, but you could claim relief for any mortgage interest and relevant expenses etc.
When you come to sell it, you’ll have to figure out how long it was your home and how long it was let for. The period that you occupied it should be covered by PRR. But the period when it was let, may instead be covered by Letting Relief- which at best, can mean you won’t have any Capital Gains tax to pay at all!
It would be advisable to write to HM Revenue & Customs (HMRC) and let them know that your circumstances have changed and that you wish to nominate your new house as your home.
There are criteria to qualify for PRR and Letting Relief, so please make sure you seek professional advice from your local TaxAssist Accountant before making any decisions.
By Jo Nockels
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