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TaxRobin
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Can you please advise me regarding whether my wife & i will

Customer Question

Can you please advise me regarding whether my wife & i will encounter a CGT liability if we sell our property , a chronlogy of events is as follows.

1 - My wife and I purchased a property in 2005 , that was renovated and subsequently let out.
2 - In April 2011 , my wife and i moved into the rented property.
3 - In August 2011 my wife and i were made bankrupt.
4 - Our trustee had our property valued at £600K , and the property had a mortgage of £591K and the trustee concluded that after costs of realisation that there would be no equity in the property.
5 - We exited bankuptcy in August 2012 .
6 - In november 2012 , the Trustee assigned his beneficial interest in the property to my wife and I for £1 , and we have maintained the mortgage payments.
7 - We have since lived in and improved the property by adding a conservatory and converting the gargage into a room.
8 - As a result of the improvements that we have made and the improved property market we are considering selling our property and have been advised that it is now worth £850K.

Our query is ,

- Is this property classed as our PPR , as we have lived in it for the last 3 years and since we aquired the trustee,s beneficial interest , and therefore exempt from CGT liability.

or - As the property was rented out prior to our bankruptcy , do we have to look back to the from when the property was originally purchased and apportion a pro rata percentage of the gain to the period pre bankruptcy when the property was not our PPR.
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello,
If sold you will need to account for the time it was rental(apportioning a pro rata percentage of the gain to the period pre bankruptcy when the property was not your PPR). The rental relief could be applied to that time.
The PPR time is allowed but only for the true time it was your residence (plus 3 years).
You should be entitled to some principal private residence relief and letting relief applies where a house that has been your main private residence is let as residential accommodation.
I sincerely hope this information is helpful but please do consult a professional in your local area prior to the sell. They can do the very complicated calculations for you based on what the sell price will be.

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