CGT rental

[cook1]

Good afternoon all,

I have owned a property since inheriting it in 1989. From this time there have been periods of me residing in it, family member renting and renting to others. I have lived in it on and off, but not for the past 17 years when it has been let out continuously.

Would anyone be able to advise on the CGT deductions that are still available if selling.

What paperwork would I need to support for when there were times I lived there?

I own another property with my partner, I have a deed of trust for a 50% share but I am not named on the Deed title That is my main residence.

I am just debating re renting v selling.

I had a huge bill recently repairing the property and improving ie essential electrical works after last tenants moved Out in March, all delayed via COvID. If I continue to rent would this be tax deductible or Allowable capital for future CGT deduction.

I Would like to speak with someone As probably not straight forward . Are there any recommendations on this site to find someone in the cardiff area. Thank you

[maths]

On any sale, lettings relief (LR) will be unavailable unless you live in the property as your main residence whilst the tenant also occupies the property which is very unlikely.

Some exemption from the capital gains tax charge on any gain may apply depending upon when you lived in the property it was your only or main residence (and in the latter case an election was lodged).

You owned the property for circa 30 years. It has been let out for a minimum of 17 years. No figures as to initial purchase cost or sales value.

Repairs etc should be deductible in calculating income tax charge on rent but not where improvements were made.

[cook1]

Thank you for taking time to respond and also my late thank you.
Property value in 1989 £79000, approx resale value is £250000.
I therefore assume any gain would have a relief of approx. 17/31 applied for residency.
Minus selling costs and any repairs to bring to market?
Minus annual allowance.
Would that be about correct?

[wamstax]

Hi there,
Unfortunately "repairs to bring to market" would not be allowable against the Capital Gain as any expenses that would be allowed in calculating the profits of a trade if the asset was used for the purposes of the trade are not allowable for CGT.
Any improvements however or additions to the property over your period of ownership AND that were reflected in the state or nature of the property at the point of disposal would be deductible in arriving at the gain.

You would therefore be calculating the gain liable to Capital Gains tax as follows:-

Sale Price of the property disposal - £250,000 (assuming that this is the actual sale price achieved)

Less Disposal costs of for example
Estate agents/solicitors etc ? ????
Gives net sale proceeds

Deduct Purchase Price 79,000
Acquisition fees Say 500 79,500
Net Gain 170,500

Exempt for Main Residence = 75,625
being
13 years occupied plus last 9 months = 165 months
over
Months ownership say = 372

Leaving a gain chargeable of £94,875
Less annual exemption 12,300
(Assuming no other gains in the year)

Leaving net taxable gain £82,875
at rates of 18% to 28% depending on whether you have any basic rate band available from your other income
Maximum tax due around £23,200

This of course assumes that you are entitled to the full Main residence exemption for your period of owner occupation

[wamstax]

You would of course have to establish that you were entitled to main residence exemption for the periods you were in occupation and there have been numerous cases where taxpayers have tried to claim MRR but not managed to satisfy the courts that their occupation had the necessary quality and degree of permanence required to qualify for that relief. see for example the recent case of Aqeela Hashmi
at
https://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKFTT/TC/2020/TC07715.html&query=(Aqeela)+AND+(Hashmi)

[wamstax]

as you will see from the Hashmi case having another property available at any time you lived at a property could disqualify a period for MRR exemption

[cook1]

Thank you Maths and also Wamstax for your comprehensive reply with indication of taxable expos, gain and tax liable if I were to sell.
Much appreciated both.