Capital Gains Tax CGT Calculation

[AMUK786]

Hi All,

I'm trying to understand if I will be liable for capital gains tax when I sell my property in November.

1. Bought the property November 2009 for £268k
2. Let the Property from November 2009 to December 2014
3. Main Residence from June 2015 to November 2020
4. Sell the property November 2020 for £525k
5. Renovated costs: £99444, Purchase Costs £9500, Sale Costs £9600

I think taking into account PRR £74k and LRR £40k (actual £65k but max is only £40k) then my Capital Gains should be around £4k?

Does my logic work?

Thank you in advance.

[maths]

Owned 11 years.
Main residence, say, 5 years.
Last 0.75 year exempt.

Gain = 525k - [268k + 99444+9500 +9600] = circa 135k
Less PPR = 5.75/11 x. 135k = 70k circa

Gives 65k
less annual exemption, say, 12k

Gives 53k

1. assumes all renovation costs deductible.
2. Lettings relief unlikely due to new changes effective post 5.4.20 ?

[AMUK786]

Owned 11 years.
Main residence, say, 5 years.
Last 0.75 year exempt.

Gain = 525k - [268k + 99444+9500 +9600] = circa 135k
Less PPR = 5.75/11 x. 135k = 70k circa

Gives 65k
less annual exemption, say, 12k

Gives 53k

1. assumes all renovation costs deductible.
2. Lettings relief unlikely due to new changes effective post 5.4.20 ?

Thank you, the above does make sense and I obviously missed the Lettings change as you have highlighted.

My confusion re: Letting relief comes from the government website since it was asking for the amount of the letting relief so assumed it was still valid but I see that this is only if you part let your home and still live there.

So it looks like my CGT will be circa £14.8k (28% of 53k).

Thanks,

[bd6759]

The last 9 months are exempt by virtue of residence. You can’t just notionally add another 9 months. The exempt gain is 5/11.

[maths]

bd6759's point is that in your case as you resided in the property for the last 9 months of ownership then the "last 9 month" rule is in essence inapplicable.

I should have spotted that you were in fact in residence for the last 9 months of ownership (ie to November 2020).

Accordingly the exemption due to PPR is 5/11 ths.

[AMUK786]

ouch, so thats £20k CGT.

[maths]

If you are married you could transfer a % and reduce aggregate CGT.

[AMUK786]

ah!

So I am married, the property is in joint names with wife. I am a high rate tax payer and my wife is a basic rate tax payer...how do you mean transfer a percentage?

[bd6759]

If you own the house jointly with your wife, the gain is split equally between you.