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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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please tell me how much CGT I have to pay on second property

Customer Question

please tell me how much CGT I have to pay on second property just disposed of
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I'm Keith and happy to help you with your question.

Did you ever occupy this property, if so for how many months?

For how many months did you own this property?

Did you ever let this property, if so for how many months was it let?

Once I have this general background data I can proceed to respond you your query.

Customer: replied 1 year ago.

I bought the property in 1996.

I lived in the property until January 2012.

I let the property out from April 2012 until May 2014

I sold the property (completion) March 2015

I pay high rate tax

The profit was £101,000

Customer: replied 1 year ago.

did you get my responses?

Expert:  bigduckontax replied 1 year ago.
Yes, I did, deep apologies for the delay; I had to collect my wife from the airport.
You are entitled to Private Residence Relief (PRR) for the period you occupied plus the last 18 months when you are deemed to be in residence even if this was not the case. Thus as your property was let for 21 months [after the adjustment] out of a total ownership of 219 months, you are liable for CGT on 21/219 of the gain made on disposal. The gain is calculated by taking the net selling price and deducting the acquisition price. the acquisition price is the coat plus purchase costs and any improvements made to the property eg installation of double glazing, central heating, extensions but not routine maintenance although the latter for the duration of the letting time is allowable against the rental for Income Tax Purposes.
Your question is silent on the purchase or sale figures to compute the gain, but that is pretty simple arithmetic to which you apply the factor I have given [21/219, say 10%]. You do have an Annual Exempt Amount (AEA) of 11K to offset this. Alternatively, in place of the AEA, you would be entitled to Lettings Relief up to 40K. I think you will find that with those allowances to offset the gain you will actually have little or no CGT to pay. Should there be a little bit to tax it would for you be taxed at 28&, but remember, only the gain.
Most people do not realise that when they sell landed property they are liable to CGT on the gain as for the vast majority PRR applies as it is their sole or main domestic residence and PPR relieves CGT at 100%.
I do hope I have helped shed some light on your situation and again many apologies for a tardy reply.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3127
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.

You said you made 101K, 10% of that is 10K, well within the AEA. Sorry, I failed to note that you had told me the actual gain. There will be no CGT to pay on your disposal.

Thank you for your support.

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