Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
Lettings Relief (LR) as available as follows as is limited to the lesser of:
'£40,000, amount of private residence relief already claimed, or the amount of any chargeable gain that is made.
You have a gain of 117.5K. Your ownership time is 30 years, your non occupational time is 26 years (for the last 18 months of ownership you are deemed to be in residence even if this is not the case. Thus 4 / 30 of the gain say 13.4% of the gain [15.27K] is entitled to Private Residence Relief (PRR). Using the formulae quoted your LR will be limited to 15.27K leaving say 102K exposed to tax less your non cumulative Annual Exempt Amount of 11.3K, 90.7K. This 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 disposal. A worst case scenario is a bill of some 25.4K.
You could try to argue the case that for the period it was used as offices the lower rate of Capital Gains tax (CGT) [10% & 20%] should be applied. A moot point, but worth pursuing. After all HMRC can only say no!
I do hope that you have found my reply of assistance.
Thank you for your support.