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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15917
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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How is capital gains worked out on a property that we rent

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How is capital gains worked out on a property that we rent and now wish to sell. We have lived in the property for seven years and rented it for three. We're unmarried
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. If you let me have the following information I'll do some calculations: 1 The month and year you bought the property and what it cost to buy. Is it jointly owned? 2 Assuming you moved in as soon as you bought it, when did you move out (month and year)? 3 When was the property first let (month and year)? Has it been let more or less continuously since? 4 The value of the property now.
Customer: replied 1 year ago.
It's jointly owned, purchased March 2006, for £170500, moved out January 2013. Tennants moved in March 2013, they're still in it and the house was valued at £310000 today.
Customer: replied 1 year ago.
We're both higher rate tax payers currently if that makes a difference.
Expert:  TonyTax replied 1 year ago.
Thanks. It does make a difference if you are a higher rate taxpayer. Leave this with me while I do some calculations. They will take a while so please bear with me.
Expert:  TonyTax replied 1 year ago.
The following figures are for each of you individually: Total period of ownership to, say, April 2016: 122 monthsTotal period of occupation by you: 83 monthsTotal period of letting: 38 monthsTotal period of vacant status: 1 monthsShare of Gain: £69,750 (£310,000 - £170,500 / 2)Exempt gain: £57,744 (£69,750 / 122 x 101 (83 months owner occupation + last 18 months of ownership regardless) Letting period gain: £25,985 (£69,750 / 122 x 20 (38 months of letting - last 18 months of ownership)Vacant period gain: £572 (£69,750 / 122 x 1)Total non-exempt gain: £12,006 (£11,434 + £572)Letting relief: £11,434 (lesser of £40,000, £57,744 and £11,434)Taxable gain £572 (£12,006 - £11,434)Annual CGT exemption £11,100Net taxable gain £0CGT is charged at 18% or 28% or a combination of the two rates depending on the level of your income in the tax year of disposal but that's not relevant in your case as there is no net taxable gain.Take a look here for information on the main residence and CGT:https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-reliefI hope this helps but let me know if you have any further questions.
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