Good morning to you and thank you for your reply.
Capital gains tax calculation – values are an example only
EXAMPLE WITHOUT DATES/ACTUAL GAIN
Main residence (2002-2005 3 years) = 36 months
Rented period (2005-2013 9 years) = 108 months
Total period of ownership (say 12 years) = 144 months
Capital gain say = £50,000
The property was your wife's main residence for 3 years before she moved to the UK. Her immigration status when she first moved to the UK is not relevant in these calculations.
Rental period would commence from 2005 when a friend was house-sitting in her flat.
Private residence relief = 36 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 = 144 months
Capital gain = £50,000
Period covered by private residence relief (36+36) =72 months out of 144 months
72/144 x 50,000 = £25,000
Gain subject to CGT (50,000-25,000) = £25,000
Although the property has been let since 2005 to present date, because it was her main residence at some point, there is a further relief available called “letting relief”.
The maximum Letting Relief due is the lower of:
£25,000 (the Private Residence Relief due)
(the gain on the part of the property that's been let)
Letting relief = £25,000
Gain chargeable to CGT -Nil- as the gain is covered by letting relief.
I hope this is helpful and answers your question.
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