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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have owned a property since Jan 1999. I bought the property

Resolved Question:

I have owned a property since Jan 1999. I bought the property for £112,500
I lived in the property until Dec 2007
I then let my step children live in the property until April 2012
I then moved back into the property for 13 months
I then rent the property for 18 months
I now want to sell the property for £320,000
I will earn no more than 24,000 this year
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.

Hello and welcome to the site. Thank you for your question.

Please leave it with me to perform some calculations and I will revert to you shortly.

Many thanks

Customer: replied 3 years ago.

OK thanks. If possible can you show me how you calculated the answer

Expert:  taxadvisor.uk replied 3 years ago.
Simon, thank you for your patience

CGT calculation -


Main residence (Jan 1999 to Dec 2007 plus 13 mths) = say 121 mths

Rented period = 18 mths

Total period of ownership (Jan 1999 to say Nov 2014) (121+52+18) = 191 mths


Relief available

Private residence relief = 121 mths

The final 18 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 = 18 mths

Total period of ownership =191 mths

Capital gain = 207,500 (320,000-112,500)

[I have rounded figures for ease of understanding]

Period covered by private residence relief (121+18) = 139 mths out of 191 mths

139/191 x 207,500 = 151,007 (say £151,000)

Gain subject to CGT (207,500-151,000) = £ 56,500

There is a further relief available called "Letting relief"

The maximum Letting Relief due

This is the lower of:

· £ 40,000

· £ 151,000 (the Private Residence Relief due)

· £ 19,555 (the gain on the part of the property that's been let) - (18/191 x 207,500) = 19,555

Gain chargeable to Capital Gains Tax after Letting relief (56,500-19,500) = £ 37,000

Annual allowance = £11,000

Net chargeable gain after allowance = 26,000

CGT calculation –

Income after personal allowance (24,000-10,000) = 14,000

CGT (17,865 x 18%) + (8,135 x 28%) = £5,494

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Expert:  taxadvisor.uk replied 3 years ago.
I thank you for accepting my answer.

Best wishes