letting relief

[TGC]

I Will soon be selling a house I used to use as a holiday home I have used it as my primary house for the last 12 months so I will get the 36months relief.
My question is could I now rent it out for 3 months (Jan- April) and hopeful get letting relief or would the taxman smell a rat and tell me to behave.
And if I could clame the above how much % would it be of the final CGT

[King_Maker]

Have you read the Inland Revenue's Help Sheet IR283 which deals with CGT for private residences?

It is downloadable from their website.

http://www.hmrc.gov.uk/helpsheets/ir283.pdf


[CAVEAT : see Matthew Hutton's article of August 2005 where Lettings Relief falls within last 3 years of ownership :

http://www.taxationweb.co.uk/articles/a ... php?id=215 ]

[mathsboy]

Does anyone have direct experience of HMRC taking the less desirable treatment in Matthew's article when considering the eligibility of a lettings relief claim ?

[Instinctive]

TGC,

There is no problem with letting for 3 months or any other period you like.

However, remember that in your case letting relief will be restricted to the gain chargeable by reason of letting. This means that you will get letting relief equal to the gains time-apportioned to the 3 months of letting.

Therefore, if the total period of ownership is say 60 months, your lettings relief will be only 3/60ths of chargeable gains after indexation.

But this is subject to the caveat in King Maker's reply above regarding Matthew Hutton's article.

Ramnik

[King_Maker]

None to my knowledge, but IR87 has been withdrawn after Matthew Hutton's article was written, and I have not found the relevant example reproduced in any other part of HMRC's website - at least not yet.

This seems to leave only CG64721 which appears to contradict IR87 :

"In a simple case in which a dwelling house has only been used either as the owners only or main residence, or has been let as residential accommodation, it may be accepted that the gain remaining after private residence relief is the gain arising by reason of the letting."

This amounts to 5/10ths, not the 8/10ths in the IR87 example.

[King_Maker]

Ramnik,

It may be more than a Caveat now?

[See above post.]

This means there is no Lettings Relief for the 3 month rental period, as it is already covered by PPR exemption.

[mathsboy]

Do you think the demise of IR187 is deliberate or part of HMRC's ongoing preference for providing guidance through Manuals instead ?

If this is a definite change in the rules then would HMRC not alert taxpayers via Bulletin or otherwise rather than leaving it to taxpayers to divine from other sources ?