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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4338
Experience:  FCCA FCMA CGMA ACIS
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I moved out of my previous home 5 years ago and have had it

Resolved Question:

I moved out of my previous home 5 years ago and have had it let out for the whole of this period.I lived in this house for over 16 years.I paid £55000 for the property and spent £22000 on alterations.I have now decided to sell and have a valuation of £215000.
As this was my only residence do I have any C G T liabilities.An accountant did inform me that I had at least 7 years from moving out to sell it without attracting C G T.
What if any tax will I have to pay when it is sold?
Submitted: 28 days ago.
Category: Tax
Expert:  bigduckontax replied 28 days ago.

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

I suggest that in future you use an accountant with a more comprehensive knowledge of Capital Gains Tax (CGT) than is currently being displayed. He was quoting the 7 year rule which applies to gifts and Inheritance Tax (IHT).

When you moved out was it to occupy job related accommodation. This would have a significant effect on my answer.

Customer: replied 28 days ago.
No ,I moved into a new home but have kept my previous home to let out.
Expert:  bigduckontax replied 28 days ago.

Right, you will be liable to CGT for the period it was let out less the last 18 months of ownership when you are deemed to be in residence even if this is not the case.

Your gain is 215K - 55K - 22K = 138K. Your ownership period is 21 years. Your let period is 3,5 years so 3,5 / 21 = say 17% is liable to CGT. 17% of 138K = say 23K. Now deduct your Annual Exempt Amount (AEA) of 11,3K leaves 11,7K which will probably be absorbed by Lettings Relief (LR) which is available up to 40K. It is highly likely that with LR you will avoid CGT altogether.

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

bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 28 days ago.

Thank you for your excellent support.