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bigduckontax
bigduckontax, Accountant
Category: Tax
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I rented out my house about 12 years ago after living in it

Customer Question

I rented out my house about 12 years ago after living in it for about 3 years and moved to Leeds for work reasons and have been a lodger in a house in Leeds since moving.
Would I have to pay captal gains on my house when I sell it? I am planning to move back in it before selling it.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to assist you with your question. You will be liable for Capital Gains Tax on the gain made on your disposal of your property. However not all the gain will be taxed. You calculate the gain by taking the disposal price from the acquisition price. The disposal price is the net sum received after deducting selling costs. The acquisition price is the sum paid plus purchase costs plus an improvements eg installation of double glazing, central heating, extensions etc but not routine maintenance as this can be used to offset rental income. You will be allowed Private Residence Relief (PRR) for the 3 years of occupation plus the last 18 months of ownership when you are deemed to be in residence even if this is not the case. All these calculations are worked out in months. You owned for say 180 months and let for 144 so 144 - 18 / 180 say 70% of the gain will be taxed at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale. You do have an Annual Exempt Amount (AEA) of 11.1K to offset this gain and as you lived in the residence before letting you would be entitled to Lettings Relief of up to 40K instead of the AEA. As you will appreciate, the 70% will actually be less as your occupation post letting will change the calculation base somewhat. I do hope my reply has been of assistance to you.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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