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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15950
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My wife and I jointly owned a flat that was for a while our

Resolved Question:

My wife and I jointly owned a flat that was for a while our main residence and afterwards let to tenants. We sold it in the 15/16 tax year and we are now calculating the CGT for our tax return. After all the calculations our total net gain was £124,799 and total PPR was £20367.
We believe the letting relief is equivalent to the PPR as it is the lesser amount. The question is can we each claim £20,367 letting relief or do we have to divide it between us and each claim £10,183?
Submitted: 10 months ago.
Category: Tax
Expert:  TonyTax replied 10 months ago.

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Customer: replied 10 months ago.
Many thanks, ***** ***** to hearing from you soon
Expert:  TonyTax replied 10 months ago.

Divide the gain in two before applying any reliefs. Each part owner will be entitled to letting relief so long as it was their main residence during their respective periods of ownership and it was let during their respective periods of ownership. If you became the owners at the same time, then you will each get up to £40,000 letting relief.

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

Customer: replied 10 months ago.
Hi Tony, and thank you for your response.Having divided the net gain of £124,799 between us are we then able to deduct the full letting relief (£20367) EACH or do we have to divide it between us thus only deducting getting £10,183 each?Thanks again.
Expert:  TonyTax replied 10 months ago.

The reason I said that you should divide the gain in two is so that you apply the reliefs individually to that share of the gain. Sometimes, it results in more letting relief being due and sometimes each part-owner will get 50% of the total for a joint calculation. Certainly, on larger gains, the letting relief for more than one owner can be more than if the caluculation was done jointly (the wrong way, by the way).

If you let me have your calculations, I will take a look at them.

Customer: replied 10 months ago.
I am attaching a PDF file with our calculations, are the highlighted figures correct or should we be deducting £20,368 each?Many thanks
Expert:  TonyTax replied 10 months ago.

Thanks.

Letting relief for each of you in your case is the lesser of £40,000 (the maximum), £10,184 (the gain covered by the period you lived in the property and the last 18 months of ownership) and £42,032 (the gain covered by letting but excluding the last 18 months of ownership if the property was let during that period). If the £42,032 does represent the letting period as described, then your letting relief is £10,184 each.

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