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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5112
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
Type Your Tax Question Here... is online now

I need to downsize, I intend to sell my home and move into

Customer Question

I need to downsize, I intend to sell my home and move into a house I have been letting for 25 years. Will I still have to pay capital gains tax if in the future I sell the house I am moving into (the property I was letting) even though it will be my home.
Submitted: 3 years ago.
Category: Tax
Expert: replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

You may have to may some CGT on this property depending on total capital gain as you would be able to claim -
- private residence relief for the period the property is your main and only residence
- additional relief to cover last 18 months of ownership
- letting relief up to a maximum of £40,000 per owner.

If the property is jointly owned then all owners would be entitled to a letting relief of £40k max.

More information on private residence relief can be found here

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.
Sorry I don't understand the first sentence of your answer.
Expert: replied 3 years ago.

Michael, thank you for your reply..

The property has been let for 25 years (300 months). Say you own the property for a total of 35 years (420 months).
Your private residence relief would be for a period of (120+18)=138 months out of 420 months and the rest of the period falls within chargeable gain.

Say your total gain is £100k.

Gain covered by private residence relief138/420x100,000 = £32,857

Gain subject to CGT (100,000-32,857) = £67,143

Letting relief - max £40,000

Chargeable gain (67,143-40,000) = £27,143

Gains allowance = say £11,000

CGT payable on (27,143-11,000) = £16,143

If the property is jointly owned with your wife then maximum letting relief would be (40,000x2) = £80,000 and will cover gain after PRR resulting in no chargeable gain.

I hope this is helpful


Expert: replied 3 years ago.

Hello Michael

The first sentence should have read "You may have to pay some CGT on this property depending on total capital gain as you would be able to claim" - apologies for typing error

I notice you have viewed my clarification toyour question on possible CGT liabilty arising from sale of a property (JACUSTOMER-m3oejpp7- Last Viewed on 03/07/2014 at 15:59).

Just checking to see if you have any issues relating to your question that I may not have addressed. Please let me know if I can be of further assistance.

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get credited for it.