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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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I have owned a flat and let it out years, bought for

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I have owned a flat and let it out for 7 years, bought for £90,000. I am now getting divorced and want to make this my main home (value now £140,000). Do I have to pay CGT on the £50,000? How long do I need to live in it to avoid CGT?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your question..I am drafting my answer with some calculations and will revert to you shortly.Many thanks
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your patience. Any gain made on sale of residential property is chargeable to CGT. Having said that, if the property has been your main residence at any point during the period of ownership, then there are reliefs available against the gain and the balance is subject to CGT. You can mitigate CGT payable by moving into the property and making it your main residence for a reasonable period. What is reasonable period depends on total period of ownership vs. period covered as privater esidence.Say you move in and stay in the property for 2 years and then move out for a period of 18 months before it is sold. CGT calculations based on this scenario are Sale of property£140,000Cost price£90,000Capital improvements£0Agents fees, solicitors fee and other costs - say£0Total cost price£90,000Gain on sale£50,000Period of ownership - months126Period as main residence - months24Private residence relief - months42(there is an additional relief to cover last 18 mthsof ownership (HS283 - example 9 )Potential capital gain£50,000Gain covered by private residence relief(42/126) x 50,000£16,667Gain subject to capital gains tax (50,000-16,667)£33,333Letting relief - maximum£16,667This is lower of- £40,000 per owner£40,000- Private residence relief£16,667- Gain on the part of the property that's been let£33,333Net chargeable gain after letting relief£16,667Gains allowance - £11,100 per owner£11,100Gain chargeable to CGT£5,567CGT - maximum at 28%£1,559 More information on private residence relief can be found on HMRC guidance sheet HS283.https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheetIf the property remained let property then the whole gain less gains annual allowance would be chargeable to CGT (50,000-11,100) £38,900 I hope this is helpful and answers your question.
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Expert:  taxadvisor.uk replied 1 year ago.
I thank you for accepting my answer.
Best wishes

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