Remortgage of a former PPR, within 36 months, CGT on the whole amount?

[Firestarter]

My wife bought a flat (in her name) for 60k in Sept 2000, before we were married. She moved out of this flat to move in with me (house in my name) in Feb 2002, and we married Nov 2002. The flat has been rented out since this point. We are looking at two options, one selling the flat (now valued at 115k), or remortgaging the flat to release some of the capital.

My questions are this.
1. As this was my wife's primary residence, I understand that if the flat is sold within 36 months of her moving out she would not be subject to CGT on this, however how would the CGT be worked out in the subsequent years?

2. If we remortgaged the property to withdraw the capital within these 36 months, and then decided to sell the property in say 5 years, would the CGT be on the value from the date of initial purchase, or could it be taken from the date of remortgage?

My concern is that if we sell today we could realise approx 50k from the property, whereas we will then be taxed on the whole of this gain from Feb 2005 onwards, and if we remortgage, whilst the gain today will be tax free, we could still ultimately end up being taxed on this gain.

Are my concerns justified?

[Ian McTernan CTA]

1. Time apportionment, PPR, last 36 months, lettings exemption and annual exemption.

2. Remortgaging has no effect for CGT.

3. Your statement is incorrect, see 1. above on time apportionment.

Ian McTernan CTA
McTernan Associates Ltd
Chartered Tax Advisers
ian@imcternan.com