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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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If I buy a leasehold property with AST which will not end

Resolved Question:

If I buy a leasehold property with AST which will not end for say 4 months, after which I will.live in property, will any CGT be due on sale of property?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. That depends on how long you live in it and how much the gain is if and when you sell it. If you live in it for, say 240 months, then only 1/60th of the gain would be potentially taxable but that would probably be covered by letting relief. Take a look at Example 9 in HS283 here. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Thanks. In example 7, please explain "chargeable gain you make because if the letting" - is that direct gain from rise in sale over purchase price, or gain from proceeds of charging rent & letting?
Expert:  TonyTax replied 1 year ago.
You referred to example 7. I cited example 9.
As example 9 shows, there is only one gain, from purchase price to sale price. You then divide it between the tax free parts and the taxable parts. The value of the property when it was first let is irrelevant. The rent you received is also irrelevant as that is disclosed as income (rent less expenses).
Customer: replied 1 year ago.
Sorry I meant Q9. So if I buy a property and live in it for 12 months, letting 1 room with use of lounge etc and then sell the property, what would letting relief be & what CGT payable?
Expert:  TonyTax replied 1 year ago.
You only count each month of ownership once. If you are living in the property and and you have a lodger, that won't impact on your CGT position and all the gain should be tax free.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15838
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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