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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5027
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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We bought a new home in 2008 and kept the old house (which

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Hi, we bought a new home in 2008 and kept the old house (which we lived in for 7 years) as a rental property. I had it valued at the time by the bank. If I now sell it, will I pay capital gains on the gains since I bought it, or the gains since I started renting it? Thanks.
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your question.In answer to your question capital gain is the difference between cost price when you first purchased the property and the selling price.As it was your main residence for seven years, all this period would be covered by private residence relief. In addition, the last 18 months of ownership would also qualify for additional relief against the gain.As the property was your main residence before you moved to another property and let it, there is a further relief called letting relief available to a maximum of £40,000 per owner.Once all these reliefs have been availed, you would claim a gains annual allowance (this tax year £11,100 each) and what is left would be taxed at CGT rate of 18%, 28% or a combination of both depending on your taxable income in the year of sale. 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.
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Customer: replied 1 year ago.
Thank you for your prompt response. With regards ***** ***** following statement "As it was your main residence for seven years, all this period would be covered by private residence relief. In addition, the last 18 months of ownership would also qualify for additional relief against the gain." can you please explain how the value of these reliefs are calculated? Thank you
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply.Lets say you owned the property for 10 years and you lived in it for 7 years your private residence relief and final 18 months of ownership relief will be(84+18)= 102/120 x (the gain)if the gain was £100k then private residence relief would be (102/120)*100,000 = £85,000 of the gain is exempt. I hope this is helpful and answers your question.
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Customer: replied 1 year ago.
Thank you for a very clear answer!
Expert:  taxadvisor.uk replied 1 year ago.
I thank you for accepting my answer.Best wishes.