Thanks.You said the flat "is sold". I asked if you had exchanged contracts yet. If you haven't do you have any idea when that is likely to happen. Is or was the property jointly owned?
Hi again.So long as you exchange contract to sell by 5 April 2014, you will be entitled to have the last 36 months of ownership of the property treated as an exempt period for CGT purposes even though you were not living in the property.After 5 April 2014, that period will be reduced to 18 months.SALE (EXCHANGE OF CONTRACTS) BY 5 APRIL 2014If you sell the property in March 2014, you will make a gain of £156,000 (£440,000 - £284,000). By that time, you will have owned it for 93 months of which you will have lived in it for 38, let it for 42 and it will have been vacant for 13.The gain for the period the property was your main home will be exempt from CGT as will the gain for the last 36 months of ownership. That accounts for £124,190 (£156,000 / 93 x 74). The remaining gain of £31,871 is split between those parts of the letting and vacant periods, £21,806 and £10,065 respectively, not covered by the last 36 months of ownership.As the property was both your main home and it was let you are entitled to letting relief which is the lesser of:1 £40,000,2 the sum of the main residence gain and the gain for the last 36 months of ownership of the property which is £124,190 and3 the letting period gain of £21,806.Letting relief of £21,806 will reduce the remaining gain of £31,871 to £10,065 and the annual CGT exemption of £10,900 will cover that so you should have no CGT to pay.SALE (EXCHANGE OF CONTRACTS) AFTER 5 APRIL 2014If you exchange contracts after 5 April 2014, you will have a taxable gain of £62,065 which will be reduced by letting relief of £40,000 and the annual CGT exemption of £11,000 to leave you with a taxable gain of £11,065.There are no reinvestment reliefs for the sale of a non-business asset such as a let property unless you want to invest in high risk companies through such vehicles as the Seed Enterprise Investment Scheme as opposed to investing in another property.There is more information on the main residence and CGT in the HMRC helpsheet HS283.I hope this helps but let me know if you have any further questions.
The letting relief is the lesser of the £40,000, the exempt gain, £37,574 (£62,400 / 93 x 56) and the letting period gain £20,800 (£62,400 / 93 x 31). So you are left with a taxable gain of £4,025 which will be covered by the £11,000 annual CGT exemption for 2014/15.If you exchange contracts to sell by 5 April 2014, the exempt gain will be increased by 18 months worth of the gain and the letting relief will be adjusted too.