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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4340
Experience:  FCCA FCMA CGMA ACIS
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I bought a house in 1996 for £35,000 and lived there 14 years

Customer Question

I bought a house in 1996 for £35,000 and lived there 14 years and rented it out for 4 years at £400 pcm. I had c/h £2,500 put in in 1996 and d/g £4,000 in 2003. I have just sold it for £148,000 and have no other income apart from married woman pension and DLA, the house is in my name only.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

You are liable for Capital Gains Tax (CGT) on part of the gain made of the sale of your sole or main domestic residence which you rented out.

Your gain is 35K + 6.5K less the sale at 148K = 106.5K.

However the gain is substantially reduced by Private Residence Relief. For starters think in months. Your total ownership period is 18 years = 216. Rented out for 48 months means that only 48/216 is taxable, but as the last 18 months is ignored that reduces to 30/218 = say 13.8%. 106.5K @ a3.8% = 14.7K subject to CGT. Deduct your Annual Exempt Allowance of 11K leaves 3.7K. This would be covered by Lettings Relief [up to 40K] so you escape liability altogether. Simple, as the Mercat on the TV advert would say!

I do hope I have helped you with your question.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support.
Customer: replied 3 years ago.

Thanks very much for your reply, it was great news , thanks

Expert:  bigduckontax replied 3 years ago.
Delighted to be of assistance.