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bigduckontax
bigduckontax, Accountant
Category: Tax
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I have a flat I have owned for 8 months. Purchased for

Resolved Question:

I have a flat I have owned for 8 months. Purchased for 285,000 and now looking to rent for 12 months elsewhere. If I sold within 18months of renting would I have to pay capital gains tax? Flat is now worth 400,000
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

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

First point, did you ever occupy this flat as your sole or main domestic residence?

From the tenor of your question and subject to your response to my enquiry, you will be liable for an element of Capital Gains Tax (CGT) on the sale. For the last 18 months of ownership you are deemed to be in occupation even if this is not the case. Let us assume you sell in 12 months. Your total ownership time is 20 months, knock off the 18 leaves 2. Thus of the gain 400K - 285K = 115K @ 2 / 20 leaves 11.5K exposed to tax. Now deduct your non cumulative Annual Exempt Amount (AEA) of 11.1K and you have 0.4K which would 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. Worst case scenario is a tax bill of a tad over 1.1K.

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

Customer: replied 1 year ago.
I have occupied for the last 8 months
Customer: replied 1 year ago.
As my sole residence
Expert:  bigduckontax replied 1 year ago.

In that case my answer changes somewhat as Lettings Relief (LR), an additional entitlement, available up to 40K, will knock out the gain altogether. There will be no CGT to pay.

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Expert:  bigduckontax replied 1 year ago.

Thank you for your support.