Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
You are always liable for Capital Gains Tax (CGT) when you sell landed property. Not many people realise this for if it is their sole or main domestic residence Private Residence Relief (PRR), which is given automatically, applies and relieves CGT at 100%. In your case the renting out period would expose you to an element of the tax, but PRR is extended to the last 18 months of ownership and you are deemed to be resident even if this is not the case. Thus in your situation you have a further 2 months in which to dispose of the property. If you go over this by say a month then your CGT exposure would be 1 / 223 [total ownership in months] of any gain made. By the time you have deducted your non cumulative Annual Exempt Amount (11.3K) and Lettings Relief (up to 40K) then it appears unlikely that there would be any CGT payable. The longer you delay the sale the greater the risk to exposure to the tax which would be levied at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of disposal.
I do hope that you have found my reply of assistance.
Yes, by increasing the ownership time, but be careful as the last 18 months rule would start to be eroded by your occupation post letting. The proportional ratio would adjust, but AEA and LR would probably relieve you of any CGT liability.
Delighted to have been of assistance.
Please be so kind as to rate me before you leave the Just Answer site.
Thank you for your support.