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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4723
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hi I own a property in the UK which I lived in from 1989 -

Customer Question

Hi
I own a property in the UK which I lived in from 1989 - 2008. Since then I have rented it out to tennant, declaring the income etc. I have additionally bought further propeties with my wife. I now wish to sell the property and would like advise on how best to minimise my tax exposure on the sale
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.

Hello, if you have any questions or need further clarification after reading my answer please let me know.

 

Thank you for your question ...

 

Please provide me with details of

- purchase price and likely sale proceeds

- total period of ownership

- period covered as main residence

- period covered as let property

- is property in joint names or sole name

 

I will do some calculations on receipt of this information..

 

Many thanks

 

Customer: replied 3 years ago.

 


Please provide me with details of


- purchase price and likely sale proceeds - £69k purchase £250k sale


- total period of ownership - 1989 - 2013....24 years


- period covered as main residence - 20 years


- period covered as let property 4 years


- is property in joint names or sole name - sole


 


I will do some calculations on receipt of this information..

Expert:  taxadvisor.uk replied 3 years ago.

Thank you for the information...

 

I will revert with my calculations shortly

 

Many thanks

Expert:  taxadvisor.uk replied 3 years ago.

Thank you for information...

 

Herewith are my calculations..

 

As the property was your main residence for 20 out of the 24 years, nearly all of the gain is covered by private residence relief as shown in my calculations.

A small balance not covered by PRR is covered by letting relief. This relief is available when you have made available your main residence for letting.

 

EXAMPLE WITHOUT DATES

 

Main residence (20 yrs) = 240 months

Rented period (4 yrs) = 48 months

Total period of ownership (24 yrs) = 288 months

Capital gain say = (250,000-69,000) = £181,000

 

Relief available

Private residence relief = 240 months

 

The final three years (36 months) always qualify for relief, even if you weren't living there, as long as it's been your only or main home at some point during the time that you've owned it.

 

Additional private residence relief = 36 months

 

Total period of ownership = 288 months

Capital gain = £181,000

 

Period covered by private residence relief (240+36) = 276 months out of 288 months

276/288 x 181,000 = £173,458

 

Gain subject to CGT (181,000-173,458) = £7,542

 

Because the property was also let during your period of ownership, there is a further relief available called "Letting relief"

 

The maximum Letting Relief due is the lower of:

 

- £40,000

- £173,458 (the Private Residence Relief due)

- £7,542 (the gain on the part of the property that's been let - (48/288 x 181,000)-(36/288 x181,000)

 

Letting relief= £7,542 ( equal to the gain you have made on the let part of the property)

 

There is no gain chargeable to CGT as all gain is covered by private residence relief and letting relief.

 

If you need more information please let me know before you rate my service.

 

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