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TonyTax
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I own a house which I wish to sell. The house was my declared

Resolved Question:

I own a house which I wish to sell. The house was my declared main residence from Aug 1987 to Mar 2012 when I bought another property with my partner. Since then I have rented the original house to a tenant - but now wish to sell this original house. The difference between the original price and the selling price will be about £120k. Will CGT be due on the proceeds of the sale - if sow approximately how much.

I believe that there is a change in allowance from 36 months to 18 months - will this affect the CGT due.

I have no other Capital Gains to declare.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

If you sell the property in, say August 2014, by that time you will have owned it for 325 months of which you lived in it for 296 and let it for 29.

The gain for the period that the property was your main home will be exempt from CGT as will the gain for the last 18 months of ownership of it. That will account for £115,938 of the gain (£120,000 / 325 x 314). The remaining gain of £4,062 (£120,000 / 325 x 11) is that part of the letting period gain not covered by the last 18 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 18 months of ownership of the property which is £115,938 and

3 the letting period gain of £4,062.

So, the remaining gain will be covered by letting relief of £4,062 and you should have no CGT to pay.

 

Take a look at HS283 here for more information on the main residence and CGT.

I hope this helps but let me know if you have any further questions

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15749
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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