minimising CGT

[Jay]

I bought my property for £50k in 1993. For the last 4 years I have rented the property out to students and submitted tax returns for each of these years.

The property is in my sole name although I am married and my wife does not work.

The property is now on the market and is likely to achieve £200k.

How can I reduce the amount CGT I may need to pay the IR? What are the penalties of not paying CGT?

Jay

[accountant@uktaxshop]

Jay,

Assuming you lived in the property up until 1999 as your main residence when it was rented out your probably have no CGT to pay on the sale.

There is a handy relief which treats the final 3 years as if you still lived in the property, which makes only 1 out of 10 years chargeable. Out of the gross gain of £150,000 (ignoring taper relief and indexation), £15,000 is applicable and this can be offset against lettings relief, leaving you with no gain at all.

You do however need to show this on your tax return for 2003/4. The IR will of course be aware you have a rental property as you are currently declaring the income, so it would be rather unwise to ignore this transaction.

If you would like a free consultation, we can go through you circumstances to check that there is no tax to pay, and if required I can prepare the CGT schedule for you for a nominal fee.

Regards

James Smith
Chartered Accountant

www.uktaxshop.co.uk
01284 764436