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Sam, Accountant
Category: Tax
Satisfied Customers: 14153
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Hello, we own a flat but rent it out.we lived in the property

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Hello, we own a flat but rent it out.we lived in the property for 5 years before renting it out.we are now tenants in another property but are lookingg to sell our is our only property.what are the capital gains tax implications?




Thanks for your question, I am Sam and I am one of the UK experts here on Just Answer.


Could you advise

1) When did you start to rent this out (month and year)and

2) what was the purpose of leaving this owned property, to rent elsewhere?

3) Will you move back into the property prior to sale, and

4)have you declared all the rental income to HMRC ?


With this information, I can then advise your capital gain position.



Thanks Sam

Customer: replied 3 years ago.

we rented it out to go travelling and then did not want to return to that area so we rented elsewhere.

we may not move back before selling depending on the tax position but its unlikely in any event.

its been rented out since july 2011

all income has been declared.


Hi Frank

Thanks for your response and the additional information.

If the property were to be sold before 05/04/2014 - then there would be no capital gains to consider, as the time that you lived there, plus the last 36 months of ownership are covered by the private residence relief rules.

But this time limit of 36 months is due to change from 05/04/2014, to just the last 18 months being permitted - so a gain will still arise, on any profits the property makes on sale, for the last Year (approx.)

However as you are also due consideration for private residence relief - as this was once your main residence and you have let it out to tenants (and declared rental income to HMRC) then this will reduce the capital gain further, and you are both due this relief, which is the lesser of
1) The amount of gain on which private residence relief is due
2) The amount of gain left over after private residence relief has been applied OR
3) £40,000
Plus the first £10,900 is exempt, as this is the annual exemption allowance (due to increase to £11,100 from 06/04/2014) which you also are awarded of each of your share of the gain.

So all things considered you may find you have very little gain on which tax will be due.

So a move back is not necessary -

Just inform HMRC of the sale when it has taken place, and if, at that time, you want some help with the calculation to establish what tax (if any) is due, I would be happy to help. You can always ask for me Sam Tax in your opening post (if you would prefer) , and the other experts will know to leave the question for me to answer.



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