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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Tony, I have a questions regarding CGT on our property that

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Hi Tony, I have a questions regarding CGT on our property that we bought in november 2000 and lived there until august 2010 with my husband with whom we have equal share of the ownership.
We have let it out between august 2010 and december 2013. We have sold the property for £250000 on the 17th April 2014. Do we need to pay CGT? I believe not, but clarification would be welcomed.
thank you in advance.

Can you tell me what you paid for the property please. What was the date you exchanged contracts?
Customer: replied 2 years ago.

Sorry, the property was purchased for £100,000. Contract exchange was 17th April 2014


Leave this with me while I draft my answer.
Customer: replied 2 years ago.

ok thanks.

Hi again.

You should refer to HS283 here for information on the main home and CGT.

You made a gain of £150,000, £75,000 for each of you and your husband. You can deduct the costs of buying and selling the property (legal fees, stamp duty, survey fees, selling agent fees etc) which will reduce the gain. By August 2014, you had owned the property for 162 months of which you lived in it for 118, let it for 40 and it was vacant for 4. The following figures are for each of you:

The gain for the period the property was your main home will be exempt from CGT as will the gain for the last 18 months of ownership. That accounts for £62,963 (£75,000 / 162 months x 136 months). The remaining non-exempt gain is £12,037 and this covers that part of the letting period not covered by the last 18 months of ownership (£158,000 / 162 x 26).

As the property has been both your main home and let, you will be entitled to a further deduction called letting relief which will be the lesser of:

1 £40,000,

2 the sum of the gain for the period that the property was your main home and the gain for the last 18 months of ownership, £62,963 and

3 the gain for the letting period, £12,037.

Letting relief of £12,037 will reduce the remaining non-exempt gain of £12,037 to £0. There will be no CGT to pay.

I hope this helps but let me know if you have any further questions.

Customer: replied 2 years ago.

Thanks Tony. Do I still have to fill in CGT form and if so, do I have to show the calculations that I don't have to pay CGT? Do we both (my husband and I) have to fill in the cgt form separately? Can I print the page with your calculation and use it in CGT (if needed) ? If we don't have to pay CGT is there any point me including solicitors fee, etc... to reduce the CG value?

You will need to disclose the sale. The CG pages are here. If you complete the return online, it will be obvious which figures go where and the HMRC software produces a calculation for you. You should include all your costs.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Hi, Tony, can you please explain how did you get £158,000 (£158,000 / 162 x 26)?

My apologies. It was a typo. It should have read £75,000 / 162 x 26. £75,000 is a 50% share of the gain.
Customer: replied 2 years ago.

ok thanks. But what the 26 represents?

The 26 is months. You let the property for 40 months and it was empty for 4 months. That's 44 months. You get the gain for the last 18 months of ownership tax free so that leaves 26 months.
Customer: replied 2 years ago.

I am filling online capital gains tax forms and one of the questions is 'DEDUCTIONS, IF ANY, IN RESPECT OF RELIEFS AND ELECTIONS.' What figure do I put there?

Another questions is : 'IF YOU ARE MAKING ANY CLAIMS AND ELECTIONS, SELECT THE RELEVANT CODE' and there is a choice of Private residence relief and letting relieve, but I can only select one.

What do I chose?

Reliefs and elections: £75,000 (£62,963 + £12,037).

Box 35: LET (see page CGN3 here)
Customer: replied 2 years ago.

If i fill in paper form CG1 which boxes do I need to fill in?

Would that be box 3 - total gain (£75,000)

and box 8 Adjustment to Capital Gains Tax -also £75,000?

And then CG2 boxes 30, 31, 32, 33, 35 and 37?

If you are completingthe return online, the boxes as shown on pages CG1 and CG2 of SA108 here will be completed automatcially based on your data entry.

Box 3 will be completed automatcially based on your data entry. Ignore box 8.

Box 30 1

Box 31 £125000

Box 32 £50,000

Box 35 LET

Box 37 See attached calculation
Customer: replied 2 years ago.

and also Box 33 (should be 31-32)? please confirm

Yes, but the software will do that for you. I'm only telling you to complete the boxes that need your input.
Customer: replied 2 years ago.

i will be completing the paper form, I think it is easier.

Box 33 is £75,000.