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bigduckontax
bigduckontax, Accountant
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I have one property in London and lived in it for 27 years

Resolved Question:

Hello,
I have one property in London and lived in it for 27 years up to 2013. When I decided to go travelling.
To fund my travels I rented the property. I know wish to return to the property, sell it and buy another to live out the rest of my days.
Could you please tell me my liability for CGT?
Would it be better to just move back and live in the original property?
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

Customer: replied 10 months ago.
please what do you think?
Customer: replied 10 months ago.
Best route for me to take
Expert:  bigduckontax replied 10 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Supposing you sold in 2017 then 3 / 30 less the last 18 months (you are deemed to be in residence for the last 18 even if this is not the case) = 5% of any gain you make on the sale will be subject to CGT. The gain is the difference between the disposal and the acquisition price. The former is net ie after deduction of selling costs including advertising whilst the former is the buying price plus costs of purchase including Stamp Duty plus and improvements eg installation of double glazing, central heating, extensions etc but not routine maintenance. Once this has been calculated you deduct your Annual Exempt Amount (AEA) of 11.1K plus Lettings Relief (LR) up to 40K and the balance will be taxed at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale. You can now see that this is likely to be a relatively small sum.

There is no need to move back in and re-occupy. Your residence before letting opens the door to LR.

I do hope that you have found my reply of assistance.

Customer: replied 10 months ago.
Thanks Keith. I bought the property for £42000 and it is likely to go for £350000. Mates is not my strong suit, could you please give me a figure?
If I did move back how long would I need to stay to avoid CGT.
Regards
Neil
Customer: replied 10 months ago.
That was Math
Expert:  bigduckontax replied 10 months ago.

350K - 42K = 308K gain, 5% is 15.4K. Less the AEA leaves 4.3K exposed to CGT so, even if you do not get lettings relief, the maximum exposure would be some 1.2K of tax due. I suspect that LR will knock that out anyway.

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Customer: replied 10 months ago.
Thanks Keith. Top man. Not to painful
Expert:  bigduckontax replied 10 months ago.

Thank you for your support, better than a poke in the eye with a sharp stick, isn't it!

Expert:  bigduckontax replied 10 months ago.

And your kind bonus.

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