How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask taxadvisor.uk Your Own Question

taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4940
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
54961312
Type Your Tax Question Here...
taxadvisor.uk is online now

My wife and I bought a house which we lived in years.

Resolved Question:

My wife and I bought a house which we lived in for three years. I then got a new job at a boarding school, where I have to live in school accommodation acording to my contract. Rather than sell our house we decided to let it out. It has been let out for the last nine years. We are now considering selling the property in order to buy something nearer where I work. Am I liable for capital gains tax when I sell this house?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Hello and welcome to the site. Thank you for your question.

Gain made from sale of property is chargeable to capital gains tax as a general rule.
Looking at your circumstances, some gain may be liable to CGT depending on the gain.

Your reliefs would be -
- private residence relief for the period the property was your main residence (3 years)
- additional relief for the final 18 months of ownership as the property was your main residence at some point during period of ownership
- letting relief up to a maximum of £40,000 per owner for the period the property was let as it was your main residence at some point.

So basically 54 out of 144 months would be covered by private residence relief. As an example - If your gain on sale of property is £100,000 then your CGT calculation would be as follows:
Gain on sale £100,000
Period of ownership - months 144
Period as main residence - months 36
Private residence relief - months 54
As you would be living in the property upto date of
sale there is no additional relief to cover last 18 mths
of ownership (HS283 - example 9 )
Potential capital gain £100,000
Gain covered by private residence relief
(54/144) x 100,000 £37,500
Gain subject to capital gains tax (100,000-37,500) £62,500
Letting relief - maximum £37,500
This is lower of
- £40,000 per owner £80,000
- Private residence relief £37,500
- Gain on the part of the property that's been let £62,500
Net chargeable gain after letting relief £25,000
Gains allowance - £11,100 per owner £22,200
Gain chargeable to CGT £2,800
CGT - maximum at 28% £784

CGT rate is 18%, 28% or a combination of two, depending on your total taxable income in the year of sale. Worst scenario is CGT £784.

More information on private residence relief can be found here

https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief


I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.

Thank you for the reply. I think I undertsand - the potential tax seems far lower than I expected. If the gain on the sale was £150,000, would that change this greatly?

Expert:  taxadvisor.uk replied 1 year ago.
Nat, thank you for your prompt reply .. here are calculations with potential gain of £150,000

Gain on sale £150,000
Period of ownership - months 144
Period as main residence - months 36
Private residence relief - months 54
(there is an additional relief to cover last 18 mths
of ownership (HS283 - example 9 )
Potential capital gain £150,000
Gain covered by private residence relief
(54/144) x 100,000 £56,250
Gain subject to capital gains tax (100,000-37,500) £93,750
Letting relief - maximum £56,250
This is lower of
- £40,000 per owner £80,000
- Private residence relief £56,250
- Gain on the part of the property that's been let £93,750
Net chargeable gain after letting relief £37,500
Gains allowance - £11,100 per owner £22,200
Gain chargeable to CGT £15,300
CGT - maximum at 28% £4,284

I hope this is helpful.
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4940
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 1 year ago.
I thank you for accepting my answer.

Best wishes.

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.co.uk/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.co.uk/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.co.uk/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.co.uk/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.co.uk/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions