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bigduckontax, Accountant
Category: Tax
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A person lived in the property 3 months when it

Customer Question

A person lived in the property for under 3 months when it was purchased 6years ago and let out since until recently sold. If the gross gain was 100k what is the cgt assuming the person is entitled main residence and letting taper relief, etc please?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to assist you with your question. Firstly, forget about taper relief, that was abolished from 6 April 2008 when the rates of Capital Gains Tax (CGT) were reduced to 18% or 28% or a combination of the two rates depending on the individuals' income including the gain in the tax year of sale. Were the gain 100K then there would be Lettings Relief (LR) of up to 40K leaving 60K taxable, worst case scenario with CGT at 28%, 15K tax due. A word of warning though; the occupation time to set up a claim for Private Residence Relief is a tad short. Most experts on this site would advise at least 6 months. If HMRC dispute the LR and are successful the liability could rise to 28K. I do hope my reply has been of assistance.
Customer: replied 2 years ago.
How about personal relief. Any to deduct from the gain at all. What if joint owned. How would the calculation work out please. Also when does one need to declare by the latest?
Customer: replied 2 years ago.
Have you seen my reply based on your calculation advise?
Expert:  bigduckontax replied 2 years ago.
I regret that you last follow up question has completely destroyed my reply, a Just Answer glitch.
The gain is derived from the difference between the acquisition and the disposal prices. The latter is net, ie after deduction of selling costs. The former is the purchase price plus purchase costs including stamp duty plus improvements eg installation of double glazing, central heating, extensions etc but not routine maintenance as this is offset against rentals received.
The relief available is LR in place of the Annual Exempt Amount (AEA) of 11.1K; you get one or the other, but not both. I included this in my original reply.
If it is joint ownership, say 50/50, then each participant would have a gain of half that in the original answer and be taxed accordingly.
If the sale took place in the 15/16 tax year then the gain would have to be declared by 31 January 2017 on the self assessment tax return which is the last payment date also.
Customer: replied 2 years ago.
I still have not got your answer on locking in the gain in value before nonresident returning to the UK. Kindly provide answer
Expert:  bigduckontax replied 2 years ago.
This is not part of your original question. I do not understand what you are talking about.
Customer: replied 2 years ago.
I have raised another question speifically to you for your expertise and made payment for it just minutes ago. Question entailed as follows : over 10 yes non UK resident expat with properties in UK........
Please check your inbox, many thanks
Expert:  bigduckontax replied 2 years ago.
Sorry it isn't there. Ask Just Answer Administration for you fee to be refunded than post again.
Customer: replied 2 years ago.
Ok , I'll forget about my other question.
However, pls can you clarify your answer LR and AEA. What does LR refer to and are we saying we can not have such as letting relief 40k and 11.1k each for the case?
Expert:  bigduckontax replied 2 years ago.
You can have LR up to 40K depending on the rental received or you can have AEA of 11.1K; in most cases LR is more beneficial.
If the property is jointly owned both participants each have either LR up to 40K or AEA of 11.1K, again, but not both.
Customer: replied 2 years ago.
So is LR available to all main residence owner occupier or to pure property investor even. If one used as main residence initially then sold it recently would it not be classed under owner occupier ?
Customer: replied 2 years ago.
Expert:  bigduckontax replied 2 years ago.
It would be available in your case, although you would be liable to capital gains tax on the time proportion of the letting period less the last 18 months when you are deemed to be in occupation even if this is not the case.