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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15944
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I own one property which has been let of my ownership. When

Resolved Question:

Hi,
I own one property which has been let for most of my ownership. When selling, I think I need to declare it as having been let - through an agent- but as it's my only property, does it still qualify for a capital gain payment and at which stage/ by whom is this assessed?
Any information much appreciated.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

Take a look at HS283 here, example 9 in particular.

Whether you have to pay CGT or not will depend on the facts and figures of your case. If the property was ever your main home and you lived in it, you will be entitled to exemption from CGT for the proportion of the gain covered by your occupation of it. In addition, you will be entitled to relief from CGT for the proportion of the gain covered by the last 18 months of ownership. You will also be entitled to letting relief if the property was ever your main home and you lived in it. If it was never your main home, then all the gain will be taxable subject to exemption for the first £11,100 (current tax year).

Assuming you don't already complete tax returns, you will need to do so for the tax year in which you sell the property and submit it to HMRC by 31 January following the end of that tax year if the disposal proceeds for all asset disposals exceed £44,400 and/or the gains exceed £11,100 (current tax year figures). CGT is payable on 31 January following the end of the tax year in which the gain is made. The rates of CGT on property gains are 18% and 28%. The rate or combination of those two rates that you will pay will be dependent on the level of your income in the tax year you dispose of the property. There is information on CGT here.

I hope this helps but let me know if you have any further questions.

Customer: replied 1 year ago.
Thank You Tony.I've looked up on the tax websites so am aware of those rules.The property was only my main home for six months and has been let for the following three years. I'm trying to work out if it's best to move into it before selling, so would like to know at which point these assessments are made? My solicitor, the buyer's solicitor, the estate agent etc.Best wishes,
alex
Expert:  TonyTax replied 1 year ago.

Can you elaborate on what you mean by "so would like to know at which point these assessments are made? My solicitor, the buyer's solicitor, the estate agent etc.". Assuming you have owned the property for 3 years and six months, can you me what it cost to buy and what it is worth now.

Customer: replied 1 year ago.
What I meant was, through which channel do I pay the gain? I guess it'd be part of my end of year return rather than anything else done on the sale by the solicitors, but was just checking so I knew when I'd need to have the money to pay.Many thanks.
Expert:  TonyTax replied 1 year ago.

You declare the gain in your tax return. The solicitors and estate agent don't get involved in your tax situation.

It's impossible to tell how long you would need to live in the property as that is dependent on how property prices move and the tax rules in place at the time of disposal. You get the last 18 months of ownership as a tax free period in any event so you would need to lived in it beyond a further 18 months to make any difference at all. That's why I asked for the purchase price and current value.

Customer: replied 1 year ago.
Thank you. It was £250,000 and is now around £550,000. I didn't take on board the 18months end period, which does make a difference!
Expert:  TonyTax replied 1 year ago.

Let me do some calculations and I'll get back to you.

Customer: replied 1 year ago.
Thank you.
Expert:  TonyTax replied 1 year ago.

Total period of ownership: 42 months

Owner occupied: 6 months

Let: 36 months

Gain: £300,000 (£550,000 - £250,000)

Exempt gain: £171,429 (£300,000 / 42 x 24 (6 + 18))

Non-exempt gain: £128,571 (£300,000 / 42 x 18 (36 - 18)

Letting relief: £40,000 (lesser of £40,000, £171,429 and £128,571)

Annual CGT exemption: £11,100

Net taxable gain: £77,471

You can deduct the costs of buying and selling (legal fees, survey fees, selling agent fees etc) from the gain.

Customer: replied 1 year ago.
Thank you! ***** also deduct the money spent while the property was let like a new boiler and letting fees etc? (am going to give you a great review!)
Expert:  TonyTax replied 1 year ago.

The costs of letting and a new boiler should have been deducted from the rental income.

Customer: replied 1 year ago.
Thank you.(I thought that expenses like boilers, gardens and possibly fees counted against the final capital gains bill, but that's a different question)
Expert:  TonyTax replied 1 year ago.

They are revenue as opposed to capital expenses. I assume you have been declaring the rental income.

Take a look here for information on the types of expenses you can claim against rental income.

TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
I have. Many thanks again.