CGT Question

[MOJO@MAILINATOR.COM]

Hi there I am totally confused and need help please.

I purchased and lived in a house for 3 years.
bought for 45k.
After these 3 years, i lived with my parents and rented my home out for 3 years - declared the rent to IR.
After living with my aprents for 3 years , i sold my original house (95k) and purchased a new house (110k) which i reside in.

do i have to pay cgt on the difference (95 to 45).
what about the fact that i have paid an extra 15k (difference between 110k and 95k).
have i actually made a profit as i have only swopped one house for another.

any help would be appreciated

[Lambs]

Mojo, I should say not.

As you will no doubt be aware, most people don't pay CGT on their only, or main residence, when they sell it. There is a specific exemption, known as the "Principal Private Residence" (PPR) Relief.

Your affairs are more complicated than the norm, as you have not occupied the property as your main residence, throughout the period of ownership. You must therefore start on the basis that PART of your gain will NOT BE EXEMPT.

Normally, the total gain, broadly as you have described, would be apportioned over the period of ownership: if we assume that your total period of ownership was 6 years, during which it was unoccupied for 3 years, then we start on the basis that half of the gain may be chargeable.

However, the last 36 months of ownership are ALWAYS deemed to have been a period of occupation as the main residence, which should get you neatly "off the hook," as it was the last three years for which the property was let.

If it was a little over three years between your living in the property and when you managed to sell it, then there is also "lettings relief," whereby if you have ever let your PPR, then more of the gain can be excepted, up to the lower of £40,000 or the amount of the gain which already qualifies for PPR relief; finally, you also have non-Business Asset Taper Relief, and your Annual (CGT) Exemption available to you.

Please note that any improvement expenditure on the propery, as distinct from general repairs, would also be deductible from the proceeds to arrive at the initial figure for your gain.