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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13915
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Sam-Tax Retired Tax InspectorDear *****,Wish you and yours

Resolved Question:

Sam-Tax Retired Tax Inspector
Dear *****,
Wish you and yours a hanppy new year.
A lady made a profit of £142,197 by buying and the selling the property and relevant details as under:-
Total number of years of possession of the propertry.....18 years
Rented out for....................................................... 13 Years
Private residence relief...................18/31x142197=82566
Letting relief ....................3/31x142197=13761
Now as it stands the letting relief should be lower of the followings
1.£40,000
2.lower of private residence relief.........£82,566
3 lower of letting relief 18/31x142197...........£59631
Can we in this instance claim £40,000 instead of £13,761.....
This is to say she pay CGT as un der:-
£142,197-82566-40,000.
Please elucidate on this and oblige.
Thanks
Sunder
Mohan J. Mitra
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi Mohan
Thanks for your question and asking for me.
The calculations should be as follows
Profit £142.197
Lived there for 18 years, let out for 13 years
I assume she let the property out for the latter years of ownership so is due the time she lived there plus the last 18 months of ownership for private residence relief
Private residence relief...................21/31x142197= £96327
Gain left to consider £45,870
Then private lettings relief is the lesser of
1) £96327
2) £45,870 OR
3) £40,000
AS 3) £40,000 is the lesser amount this is permitted - so gain of £45.870 - £40,000 = £5870
Then as the first £11,000 of the gain is exempt (if sold 2014/2015) or £10,900 is sold 2013/2014 she has no capital gains to pay.
Thanks
Sam
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