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Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
Before I can properly address your question there are a few points which require clarification. You tell me you moved out of Property 1 then let it. What about Property 2; did you ever live in it?
For Property 1 you have Private Residence Relief (PRR) for the period of occupation plus the last 18 months of ownership when you are deemed to be in residence even if this is not the case. Your ownership period is 14 years and your let period 0.5 years. Thus 0.5 / 14 [say 4%] of any gain would be exposed to CGT. Your gain is 420K - 285K - 20K = 115K. Of this only 4% is subject to CGT, 4.6K.
Property 2 gain is 190K - 60K - 10K = 140K.
Now in the tax year of disposal you have a non cumulative Annual Exempt Amount (AEA) of 11.1K. It therefore behoves you to dispose of the properties in different tax years to take advantage of the AEA which I emphasise is non cumulative. For Property 1 you are also entitled to Lettings Relief (LR), but the gain is so small that your AEA will knock it out anyway.
CGT is levied at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale. Your worst case scenario, assuming selling in two consecutive tax years, would be 28% on 140K - 11.1K = 128.9K, a tad over 36K.
I do hope that you have found my reply of assistance.
You are dead right, I am working in reduced light as my wife is still asleep. I am currently in a time zone 6 hours ahead of BST.
120K - 11.1K = 108.9K exposed to tax. 32K - 15K gives 17K @ 18% = 3.06K tax. The balance, 91.9K is @ 28% = 25.732K. Total tax due is some 28.792K.
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Yes. LR up to 40K is available if you occupy before or after a letting period. You would get a little PRR, proportional to your occupation time.
Delighted to have been of assistance.
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