Help with CGT on rental property

by **Joe Public 1974** on Tue Jan 17, 2012 3:58 pm

I’d really appreciate some advice on the amount – if any – of Capital Gains Tax I might be liable for, in the event I sell a flat I own. I’ve listed some information which may be relevant (and some which might not be!):

I bought the flat in September 2000 for £66,000, with a £62,500 mortgage.

The flat was my own personal residence, and the only property owned by me until July 2004, when I brought another property, which become my own personal residence. At that point, I began to rent my flat out, having changed my mortgage to a buy-to-let, and increased the loan to £89,500. The flat was formally valued at that point as being worth £115,000.

Now I’d like to sell the flat. I think it would be worth between £120k and 125k. Say I could get 125k, which would give me about £33k ‘profit’ after estate agents and solicitors fees – would I have to pay tax on everything over the CGT allowance, or does the fact I lived in the property for several years offer me any benefit?

I am married (only last year), but the mortgage is in my name only.

Thanks in anticipation!

by **King_Maker** on Tue Jan 17, 2012 5:22 pm

The Gain will be £59000 less expenses.

Lettings Relief will be available also.

Unlikely to be much CGT, if any.

Have you read HS283 on HMRC's website?

http://www.hmrc.gov.uk/helpsheets/hs283.pdf

by **Peter D** on Tue Jan 17, 2012 6:59 pm

There will be no CGT Liability as King-Maker has pointed out. It appear you have only used just over £24,000 of your max £40K LR relief so you do not need to be in a rush to sell. Here are some numbers for you:
Purchase 66000 14/09/2000
Disposal 125,000 14/04/2012
Total Gain 59,000
PRR 34,630 81 138
Capital Gain 24,370
Lett Relief 24,357 Qual Days 1746
Net Gain 13
CG Allow 10,600
CGT 18% 0 0
CGT 28% 0 0

CGT Bill 0

Regards Peter

by **Joe Public 1974** on Wed Jan 18, 2012 5:29 pm

Many thanks for the advice so far, very good news.

Is the daily figure (1746) used for lettings relief in the example, the time of ownership minus the period the property was my residence, minus the final three years? If so, presumably I'd need to subtract some days to reflect the few months when I was between tenants in that period?

Thanks!

by **King_Maker** on Thu Jan 19, 2012 9:15 am

Joe Public 1974 wrote:Many thanks for the advice so far, very good news.

Is the daily figure (1746) used for lettings relief in the example, the time of ownership minus the period the property was my residence, minus the final three years? If so, presumably I'd need to subtract some days to reflect the few months when I was between tenants in that period?

Thanks!

No, you won't be able to deduct the days between tenants, as it was not your residence/main residence. But that may make no difference to the CGT position anyway.