Is there a minimum time I have to have it as my main residence or is the figure of 18 months always applied regardless of the length of time?
If I move into it now , and have owned the property since Jan 2008, that would be 66 months (72 - 18). Does that mean 66% of the gain is taxed at 28% if the gain takes my income over the higher rate of tax?
So if we use the figure of £100,00 as the gain , £66,000 would be taxed at 28% so the overall tax to pay would be £18,480?
Is it the same calculation if you haven't lived in it as your main residence but without subtracting 18?
I will have another CGT question to ask later this week so I may try to direct it to you.
I'm a little confused about calculating the gain, on the Which website it states an example:
If you own a property years (240 months), live in it as your main residence first 12 years (144 months), use it as a second home next four (48 months), then rent it out final 4 (48 months), you can claim both private residence relief (PRR) and letting relief on the gain you make when you come to sell.
Assume the profit you make on the sale is £100,000. The amount of PRR you can claim is 144 months plus 18 months final period of ownership. This is a total of 162 months, out of the 240 months total- 0.675%, which means that £67,500 of the £100,000 gain (£100,000 x 67.5%) is tax-free.
So in my example, would it be 66 / 72 = 91% so 91% of the gain would be taxed at 28%, not 66% of the gain?
I bought the property in October 2007 and it has been let since. I would only move in if it helped to reduce my CGT so it depends on how much potential savings there would be as to whether it is worth my doing so.
The potential approximate gain is £275k (without deducting my personal allowance). This would also take me into the higher rate tax band.
Is it possible to give me the approximate calculation scenarios:
1. If I did not move in and sold it in May 2015
2. If I move into the property in May 2015 and sold it in November 2015.
Please let me know if you need any other information.
Sam, I thought Keith was answering but if it has been assigned to you, yes please can you answer. I'm not sure if you have the whole of the question with the rest of the communication between myself and the advisor? Do you need me to provide more info?
Keith said he would reply today but was going on holiday to Thailand month so I think it's best to go ahead and answer, otherwise I might be waiting a month!
Can I please clarify you said the final position based on moving in would be £228,893.62 x 28% = £64,090.21, not £70,250 as stated as I think you added the £11,000 annual exemption rather than deducting?
So the overall difference between moving in and not moving in would be £9,829.79 not £3670?
So am I right to assume the longer I live there, the greater the overall saving?
I am also a little confused with private lettings relief and private residence relief. Are they two different tax reliefs? In your example I think you have applied private residence relief of 6 months.
Many thanks again.
Thanks . These will be my final questions, I appreciate you have spent time on this.
Is private lettings relief not applicable if you have never lived in the property?
If I have CGT losses to offset eg £30,000, is this deducted from the overall gain of £275k and then tax applied or offset to the overall calculated liability?
Thanks again and I will provide ratings after this!