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bigduckontax
bigduckontax, Accountant
Category: Tax
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I bought a house in 2002 for £108000 and lived in it until

Customer Question

Hi, I bought a house in 2002 for £108000 and lived in it until 2005. In 2005 I tried to sell it but was unsuccessful. I have a copy of the estate agents' agreement with a market value of £175000. I started to let it out in 2006 until recently. I am in the process of selling it for £150000. Will I need to pay CGT as it has increased in overall value, but decreased since it stopped being my residential property? Many thanks Debs
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, Debs, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. You will be liable to CGT on any gain made on disposal. You bought for 108K and intend to sell for 150K so you will have made a gain of 42K. As you lived in the house only the let part will be liable to the tax and in any event for the last 18 months you will be deemed to be in occupation even if this is not the case. Total ownership time is say 180 months. Total occupation time is 36 = 18 = 54 months. Proportion liable to CGT is 126 / 180 is 70% 70% of 42K is 29.4K. Now deduct 11.1K, your Annual Exempt Amount (AEA), leaves 18.3K to be taxed. But soft, as you lived in the house you will be entitled to Lettings Relief (LR). LR is available up to 40K depending upon the rental received. It thus seems highly likely that you will escape CGT altogether. If by chance LR does not completely clear your CGT slate then any outstanding is 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. I do hope that I have been able to put your mind at rest on this matter.
Customer: replied 1 year ago.

Hi Keith,

Thank you. How do I claim LR or who do I have to contact to arrange all this?

Regards

Debs

Expert:  bigduckontax replied 1 year ago.
When you do your self assessment tax return for 15/16 you will need to complete a Supplementary sheet SA108 in addition to SA200. Any tax due would be payable by 31 January 2017. Unfortunately the notes to the 108 are utterly unhelpful and reading them you might imagine that Lettings Relief does not exist at all! However, there is a space for a note [Box 37] so just put it in there and watch like a hawk for HMRC to conveniently not notice a claim to lettings relief! Please be so kind as to rate me before you leave the Just Answer site.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your excellent support.
I am so sorry not to be able to give you chapter and verse on the method of obtaining LR. i have been trawling the web without avail!

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