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bigduckontax, Accountant
Category: Tax
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Hi, Re CGT Can you help regarding a property I bought in

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Can you help regarding a property I bought in 1998 and lived in until 2011, 13 years.
I have rented it since Jan 2012.
I have heard that CGT may be in part avoidable as I lived there for ten years plus.
My question is, within how many years must I sell the property to take advantage of this, and how can I calculate this?
Thanks for your help
Hello John, I'm Keith and happy to help you with your question.
Always bear in mind Benjamin Franklin's dictum that in life there are but two certainties, death and taxes! So, how do we get out of the latter?
Firstly, as you lived in the property as your sole or main domestic residence for 156 months out of a total ownership period of say 192 months. Take 156 from 192 then deduct 18 (the last 18 months you assumed to be in occupation even if you are not) gives 18 and 18/192 is the proportion of whatever gain you make on disposal which is liable to Capital Gains Tax (CGT).
Now you have an Annual Exempt Allowance of 11K and as you have let the property you are entitled to claim Lettings Relief up to 40K also. These sums can be deducted from the gain. The balance is taxable at 18% or 28% or a combination of the two rates depending on your income in the year of sale plus the gain. There is no '10 year rule,' the key to lettings relief is your earlier occupation.
So you see your exposure to CGT is limited. Without quantitative data, of course, I cannot make any assessment of your possible liability.
I do hope I have shed some light on CGT for you.
bigduckontax and other Tax Specialists are ready to help you
Thank you for your support.