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I have bought a flat in 2000 ,000 pounds in Glasgow.

Resolved Question:

I have bought a flat in 2000 for 205,000 pounds in Glasgow. I lived in it until 2011 when I let it out. I am selling the flat now, the tenant will stay until next Monday.
Do I need to pay capital gains tax on the difference between 2000 and now, or only from the point I rented out the flat? Are there ways to reduce this further?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Leave this with me while I draft my answer.
Customer: replied 1 year ago.
OK Great thanks.
Expert:  TonyTax replied 1 year ago.
You should refer to the HMRC helpsheet HS283 for information on the main residence and CGT. In particular, refer to Example 9. The gain is treated as having accrued evenly over the period of ownership and the value when it was first let is irrelevant. Divide the gain into months of ownership. The gain for the period that you lived in the property and the gain for the last 18 months of ownership will be exempt from CGT. In addition, as the property was let as well as having been your main home at some point, you will be entitled to a further relief called letting relief and this will be the lesser of: 1 £40,000,2 the sum of the gain for the period that you lived in the property and the gain for the last 18 months of ownership and3 the gain for that part of the letting period not covered by the last 18 months of ownership. If you still have a taxable gain after deducting the reliefs you are due, the first £11,100 of net gains you make in any one tax year are exempt from CGT. There are two rates of Capital Gains Tax, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in the tax year you dispose of the property. Look here for information on how to calculate the CGT if you need to. I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
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Satisfied Customers: 15882
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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