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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I bought my property in May 1992 price of 240,000 pounds. I

Customer Question

i bought my property in May 1992 for a price of 240,000 pounds.
I am thinking of selling this and moving now overseas
I have had the property valued at 900, 000pounds
I lived in the property for eight years upto the year 2000
I have had the property let out since that time until June 2014
I am now back in the property as my main house since being divorced in January 2015
Please can you advise how much CGT I will have to pay if I sell the property
Best regards
Noel Hudson
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Can you tell me which month in 2000 you moved out of the property please. Was it let straight away?
Customer: replied 2 years ago.
no I moved out in Nov 2000
the property was let from around june 2002 until june 2008
then again from april 2009 until june 2014
I moved back inot the property in June 2014
thanks noel
Expert:  TonyTax replied 2 years ago.
Leave this with me while I do some calculations. These and my answer will take a while so please bear with me.
Expert:  TonyTax replied 2 years ago.
Hi again.
If you sell the property in, say December 2015, for £900,000 you will make a gain of £660,000 (£900,000 - £240,000). By then you will have owned it for 284 months of which you will have lived in it for 121, let it for 135 and it will have been vacant for 28.
The gain for the period that the property has been your main home will be exempt from CGT. That accounts for £281,197 (£660,000 / 284 x 121). Of the remaining gain of £378,803, £313,732 covers the letting period (£660,000 / 284 x 135) and £65,071 covers the vacant period (£660,000 / 284 x 28).
As the property was both your main home and it was let you are entitled to letting relief which will be the lesser of:
1 40,000,
2 the exempt gain of £281,197 and
3 the letting period gain of £313,732.
Letting relief of £40,000 will reduce the remaining gain of £378,803 to £338,803 and the annal CGT exemption of £11,100 will reduce it further to leave you with a net taxable gain of £327,703.
There are two rates of Capital Gains Tax, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in the tax year you sell the property. If you sell it in 2015/16, one of the following scenarios will apply:
1 If the sum of your income and the net taxable gain is £42,385 or less, then you will pay CGT at 18%.
2 If your income alone is £42,385 or more, then you will pay CGT at 28%.
3 If your income alone is less than £42,385 but the addition of the net taxable gain take you over £42,385 then you will pay some CGT at 18% and some at 28%.
I hope this helps but let me know if you have any further questions.