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bigduckontax
bigduckontax, Accountant
Category: Tax
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I have a question about capital gains tax: We sold a

Resolved Question:

Hello
I have a question about capital gains tax:
We sold a flat that we owned from 2000 until 20/04/2015. The flat was let continuously throughout that period apart from:
(i) The period from 02/03/2015 to the sale (20/04/2015), when we moved into the flat and we used it as our main residence
(ii) A period of about 6 weeks around easter 2003, when we also moved into the flat, but we do not have many records to demonstrate this.My question is whether we are entitled to the £40,000 lettings relief (each) and whether we can deduct this amount from the total gain.Many thanks
Submitted: 11 months ago.
Category: Tax
Expert:  bigduckontax replied 11 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. As you occupied the flat after the letting period you are each entitled to Lettings Relief (LR) up to 40K depending on the rentals received. You are also both entitled to your non cumulative Annual Exempt Amount (AEA) of 11.1K. Remember that for the last 18 months of ownership you are deemed to be in occupation even if this is not the case so this will reduce the proportion of the gain subject to Capital Gains Tax slightly by decreasing the gain. Not much, but better than a poke in the eye with a sharp stick. I do hope that you find my reply of assistance.
Customer: replied 11 months ago.
Thank you very much Keith,May I ask please two follow up questions, just to make sure that our understanding is correct:
- Even if we stayed in the flat for a short period (a few weeks) before the sale, we are entitled to the Lettings Relief and the private residence relief for the last 18 months of ownership?
- You mention that each is entitled to Lettings Relief up to £40k depending on the rentals received: how can we accurately calculate the LR? What do you mean by the rentals received? I have read in the HMRC guidelines that the LR is the lowest of the Private Residence relief or £40k. I am not sure how can we calculate the LR.Many thanks
Expert:  bigduckontax replied 11 months ago.
Correct, you must reside in the accommodation either before of after the letting period to get LR. Yes the last 18 months extend the PRR, even HMRC accept that you cannot dispose of a house as quickly as you can a second hand car. It used to be 3 years, but has since been reduced. In your case LR will exceed PRR so you claim the former. If your net rental income was, for example, 30K then the LR would be 30K. The HMRC guidelines are, as usual, contradictory or rather not fully expressed. Please be so kind as to rate me before you leave the Just Answer site.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3389
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 11 months ago.
Dear *****,Apologies for being pedantic, but I really need to make sure that I understand the rule that applies to our circumstances:
You mention that "It used to be 3 years, but has since been reduced". I would like to ask again (if though you have explained it very clearly, but I really want to be 100% confident that I understand) if this would apply to us, since we only lived in the house for a few weeks.And my final question: can you calculate the capital gains tax for us, if we send you all the relevant figures? Can I ask for this in a different question? Is this a service that can be offered through this site?Many thanks
Expert:  bigduckontax replied 11 months ago.
Thank you for your support.
Expert:  bigduckontax replied 11 months ago.
Yes I can help with the calculation. Please ask forCustomerin your question to get my services.

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