I have owned my currpent property for 10 years and it is now about worth about £400k more than I paid for it. ~£800k today
Two lodgers stay with me and occupy about 35% of the house . I claim Rent a room relief
I am aware that I get the last three years of ownership but I do not expect to sell for another 10 years.
If I sell in five tears and the house is worth 1,200k I would of made £800k .
I have heard two seperate peices of advice
(1) I would pay tax on 35% of £800k * (17/20) - £357k less 40k letting release = £317k tax liability
(2) If thetenants are sharing meals tv etc with me and the rooms are not cut off I have no laibility
;---------------------------------------------
the person who advised me (1) above said if I got rid of one tennant now when I sell the periods I rent to just one lodger would all be exempt form CGT , as I may sell now the calcualtion would be
I would pay tax on 35% of £800k * (10/20) - £210k less 40k letting release = £170k tax liability
Off course tax legislation may be different then but I pay tax on but currently paying tax on the rentlal income at my marginal rate on everything over 4250 means that I would be marginally better off asking one lodegr to go and I would have a spare room
I asked my MP and they refered me to the HMRC leaflets that to my mind was ambigous
Help please
regards
Peter
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