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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15847
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I want to sell my rental property and I wondered whether I

Resolved Question:

I want to sell my rental property and I wondered whether I can get relief on the capital gains tax without moving back into the house for a period of time before I sell it. I have owned it for 12 years and lived there for 8 years ( and rented it for 4) before moving out to live with my partner. I now own 50% of the house that I live in with my partner. If I can get relief, what percentage relief would I get?
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.
Hi. You should refer to HS283 here. In particular, Example 9 will be relevant to your case. The gain for the period that the property was your main home will be exempt from CGT as will the gain for the last 18 months. That means 9.5 years out of 12 years of the gain will be tax free due to your occupation of it. You are left with 2.5 years of gain. As the property was both your main home and it has been let, you will be entitled to letting relief which will be the lesser of: 1 £40,000, 2 the exempt gain for the 9.5 years mentioned above and 3 that part of the letting period gain not covered by the last 18 months of ownership, ie the gain for 2.5 years. If there remains any taxable gain after deducting the main residence relief for the 9.5 years and the letting relief for 2.5 years, then the first £11,100 of that will be tax free due to the annual CGT exemption each individual is entitled to. I hope this helps but let me know if you have any further questions.
Customer: replied 11 months ago.
Thank you Tony. Can you confirm that I dont need to go back and live in the house to claim any of the relief that you mentioned in your response.
Also can you confirm my calculations based on a gain of £110,000:
Residential relief = 9.5/12 x £110000 = £87,083
Letting relief = 4/12 x £110,000 = £36,666
Total relief = £123,749 therefore no CGT to pay!Finally, would I have to pay any CGT on my 50% of the house I live in now, with my partner, if we ever sold it (assuming we remained resident for all the time we owned it).
Expert:  TonyTax replied 11 months ago.
You don't need to move back in as you are given the last 18 months of ownership as a tax free period. The residential relief you have calculated is correct. The letting relief should be based on 2.5 years as the last 18 months is included in the 9.5 years. Either way, there will be no taxable gain. Assuming you live in the property you now share for the entire period of ownership you won't pay any CGT.
Customer: replied 11 months ago.
That's excellent. Thanks Tony
Expert:  TonyTax replied 11 months ago.
Thanks. Would you mind rating my answer before you leave the site please.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15847
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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