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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
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I would like advise on CGT on selling a rental property

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Hello,
JA: Hello. How can I help?
Customer: I would like advise on CGT on selling a rental property (that was previously our home for 8 years). I woudl like to know how to calculate what CGT i woudl pay?
JA: The Expert's answer will cost $10 to $100, depending on the issue type and time to respond. You'll see the exact amount on the next page and can decide then. It's way less expensive and more convenient than any face-to-face visit.
Customer: OK thanks for letting me know - when you say next page where do i look on the site for this next page?
JA: Have you talked to a tax professional about this?
Customer: Not yet - just reading what is on HMRC website
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able to help you.
Customer: dont connect me yet as i am going to be busy on calls for the rest of the day - just maklng an initial enquiry

Hello and welcome to JustAnswer. I’m taxadvisor.uk, a UK qualified accountant. Reviewing your question and will respond to you shortly.
Many thanks

Thank you for your question.

Please advise

- the likely gain after taking into account costs associated with buying and selling property

- cost of capital improvements if any

- date of purchase and sale

- date moved out before property made available for rental

- owned jointly or in sole name

Many thanks

Hi there

Without the informationrequested in my previous response, I can only give you a general answer, but I hope this helps.

As the property was used as main residence at some point during period of ownership, you will be entitled to these reliefs

- private residence relief for the period you lived in it as your main residence - say 8 years (96 months)

- relief for final 9 months of ownership

THis period i.e. 105 months out of total period of ownership will be covered by private residence relief. Gain covering the rest will be subject to CGT after taking into account gains annual allowance of £12,300 per owner.

More information on private residence relief here (hs283)

https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2021

My aim is to give you a professional service. I hope this is helpful and answers your question.

If you need more assistance, please use the reply box below and let me know. It has been my pleasure to assist you with your question.

Customer: replied 10 days ago.
Hello and thank you for your response. I have added the additional info you requested;
- the likely gain after taking into account costs associated with buying and selling property
£208K
- cost of capital improvements if any
£25k
- date of purchase and sale
purchase was Sep 1991 and anticipated sale would be Oct 2021
- date moved out before property made available for rental
Sep 2003
- owned jointly or in sole name
owned jointly with my wife
Customer: replied 10 days ago.
Please advise on how you calculated this as well. Thanks

Thank you for you reply.

Attached is CGT calculation.

Assuming you both have other income that covers your tax rate threshold, i have calculated CGT at higher rate of 28%.

If your taxable income is below £37,700 then some of the gain will be taxed at 18%.

I hope this is helpful and answers your question.

Customer: replied 9 days ago.
Hello,
Just wanted to let you know that the purchase date was Sep 1991 and Date we lived in the house was from Sep 1991 to Sep 2003 and the anticipated selling date is Oct 2021. Would you please re-run the calculation as your previous dates were different.
Thanks

Thank you for your reply.

My calculations are based on dates

main residence - Sep 1991 to Sep 2003

Let period - Oct 2003 onwards

Proposed sale date - Oct 2021

Many thanks

Customer: replied 9 days ago.
Sorry but what you have on your pdf attachment with the calculations shows:
Date of purchase May 2009 (it should be Sep 1991)
Letting Period Sep 2016 to Sep 2021 (it should be Sep 2003 to Oct 2021)
Period as main residence as May 2009 to Oct 2021 (it should be Sep 1991 to Sep 2003)Hence why i am querying this calculation. Please advise back.
Thanks
VS

My humble apologies for inadvertent error. I had two files saved with same name.

Attached is correct file

Customer: replied 8 days ago.
Thanks for the update. How did you calculate the potential capital growth? Was it the difference between the Sales Proceeds (£223,000) less cost (ie buying, selling & improving) which comes to £40,000 approx?
Also how soon should you notify HMRC, can it be done as part of the annual tax return or is there a specific time period?
Thanks and KR
Viraj

Thank you for your reply.

You need to report a sale and pay CGT within 30 days of completion.

Potential capital growth is sale proceeds and less purchase price, capital improvements and costs of buying and selling the property.

More on reporting and paying CGT here

https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

If there are no other issues I will appreciate if we could regard my responses/answer to this question as accepted.

Many thanks

Customer: replied 8 days ago.
Hi and yes, for now you have been really helpful and confirmed what I had gleaned from the HMRC website. Thanks and we can close this query. KR
Vs

Thank you for your kind words.

I will appreciate if we could regard my answer to this question as accepted under your status.

Many thanks

Customer: replied 8 days ago.
it’s accepted - thank you.

Thank you.

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