sell up or move in

linda l · Postby **linda l** » Thu Apr 17, 2008 7:12 am

i purchesed a property in march 1997 for Â£63000 and lived in it for 5years.In march 03 imoved out and rented it continually since. I am now thinking ot selling for Â£265000. 2 questions, what kind of tax bill can i expect ?, also if i moved back and lived in it again for say a year as my home would that become my ppr. I dont own any other property and do pay tax on rental income.

pawncob · Postby **pawncob** » Thu Apr 17, 2008 7:40 am

The gain will be time apportioned.
6/11ths will be wholly exempt. 5/11ths will be chargeable, but subject to a letting exemption of Â£40k, so the gain would be cÂ£52k taxable at 18%.

linda l · Postby **linda l** » Thu Apr 17, 2008 7:47 am

thanks pawncob, but if i moved back in now would your calculation be the same if i lived there for a year say

Peter D · Postby **Peter D** » Thu Apr 17, 2008 8:19 am

Linda, here is no Tax due on the sale. I need better dates as you say you lived there for 5 years but moved ount in March 03 which is 6 years. However after the PPR 36 Months exemption, if you have been reporting the rental income profit to HMRC then Letting Relief will apply which based on your dated actaully hits it max at Â£40,000. This is the calculation:
Capital Gains Summary

Purchase Price Â£63,000 14/03/1997
Indexation 0.000 Â£63,000
Legal Fees Â£0
Sale Price Â£265,000 14/06/2008
Enhancements Â£0
Legal Fees Â£0
Gross Gain Â£202,000
PPR Relief Â£160,104 Â£41,896
Letting Relief Â£40,000 Â£1,896
Taper Relief 0% Â£1,896
CG Allow'ce 1 Â£9,600 -Â£7,704
CG Bill Â£0

'-' numbers indicate unused relief's or allowances. Regards Peter

linda l · Postby **linda l** » Thu Apr 17, 2008 9:10 am

thank you peter well spotted I moved out in march 02. have been paying tax on rental income since. does your calculation still stand ?

Peter D · Postby **Peter D** » Thu Apr 17, 2008 9:17 am

No fraid not :
Capital Gains Summary

Purchase Price Â£63,000 14/03/1997
Indexation 0.000 Â£63,000
Legal Fees Â£0
Sale Price Â£265,000 14/06/2008
Enhancements Â£0
Legal Fees Â£0
Gross Gain Â£202,000
PPR Relief Â£142,148 Â£59,852
Letting Relief Â£40,000 Â£19,852
Taper Relief 0% Â£19,852
CG Allow'ce 1 Â£9,600 Â£10,252
CG Bill Â£1,845

Are you married ? This is not a proposal but, if you are married then an inter spousal transfer at no gain, no loss would double the CGA ( 2 X Â£9,600 )

You will be able to deduct the cost of acquisition, and legal fees, Sale cost and legal fees and you have have made some capital enhancements like a conservatory or an extra room over the garage. Regards Peter

Peter D · Postby **Peter D** » Thu Apr 17, 2008 9:30 am

If you genuinely moved back in lock stock and barrel for 6 month and you did not own another PPR or it was genuinely rented out and you could prove it then the tax would fall to zero, however you risk exposing the other house to CGT for that period. Regards Peter

linda l · Postby **linda l** » Thu Apr 17, 2008 9:33 am

no husband, legal fees as you say would reduce it further.if i moved back in could it be my ppr

linda l · Postby **linda l** » Thu Apr 17, 2008 9:51 am

peter dont quite understand your reply,bit about genuinely rented out zero tax?. . thanks linda

Peter D · Postby **Peter D** » Thu Apr 17, 2008 9:57 am

Well yes but it only adds to the total number of months you occupied the property but you still only have the the 36 months exemptio, you no not get two lots of 36 months. Read IR283 on the HMRC web site. The PPR calculation is the total period of occupation plus 36 ( PPR Exemption ) divided by the total period of ownship ( in whole months ) Also beware that keeping the property may expose you to the value falling in this delicate property market. Regards Peter