Naive on Tax Matters - Am I fretting unnecessarily?

[Dollydaydream]

I purchased a house in 2000 for £98,000 and lived there until April 2016 when I took on a tenant who is still there.
It is now worth approx £340,000
In March 2015 I took out a mortgage and bought a second property with my partner as his job relocated. I didn't move in till April 2016.

I am going out of my mind with worry as today I realised I only have 18 months before I am liable to pay CGT on my previous residence - I thought it was 3 years.

I have been on the HMRC chat and they tell me I am liable to pay CGT for the whole 17 years I lived at my previous property - surely I won't have to pay 20% of the whole £242,000 profit as for 17 years it was my only and main residence?? i.e. £48,000?

I am so distraught as I only have 12 weeks in which to sell before the 18 month cut off and tenants are in there. I'm sick with worry.

Can anyone advise? I'm really not up taxes at all....

Thanks!

[bd6759]

Stop worrying. It will be a long time before there will be any CGT to pay.

The gain is exempt for the period it is your residence, plus the final 18 months.

After that, you pay CGT only on a portion of the gain. Assuming you lived in it for exactly 17 years, that is 204 months. Add to that the further 18 months giving 222 months exemption. If you sold it after 223 months, the exemption would be 222/223 of the overall gain. (Put another way, the taxable gain would be 1/223 of the overall gain).

Also, as you are now letting the proeprty there is an additional relief - letting relief. That has the effect of exempting up to a further £40,000. Depending on how property prices increase, it could be a few years yet before there is tax to pay.

[AnthonyR]

I have been on the HMRC chat and they tell me I am liable to pay CGT for the whole 17 years I lived at my previous property - surely I won't have to pay 20% of the whole £242,000 profit as for 17 years it was my only and main residence?? i.e. £48,000?

HMRC on the ball again as always....

[maths]

It's frightening and in fact scandalous.