PPR relief and CGT calculation

[landlord1234]

Hi ,
I'd welcome any comments on this.

What PPR relief if any would be available under the following circumstances and how should CGT liability be calculated.

John purchased 'property A' in 07/1996 as primary residence and only property owned for 50,000. He lived their with parents.

John moved out of this property when he purchased another property as his primary residence in 07/1998.

John's parents continued to live in 'property A' but it remained under John's ownership until it was sold in 06/2019 for 120,000

Refurb costs 15,000
Legal costs 5,000

Thanks

[wamstax]

Hi there
So property sold in year ended 5th April 2020 so that in addition to the period you actually owned the property and occupied as main residence you would also be entitled to last 18 months as Main Residence Relief .

Therefore exempt amount of gain would be 24 months of occupation plus last 18 = 42 months over whole period of ownership = 276 months.

So if overall gain was £50,000 then £4,348 would be exempt leaving £45,652 chargeable less the annual exemption for the year (as long as nit used elsewhere) £12,000 = 33,652 at the appropriate tax charge rates of 18% and/or 28% depending on your other income for the year

[landlord1234]

Thanks.

I follow your logic , but not sure about the maths.

I get

(42 / 276 ) * 50,000 = 7608 , not 4348

or am I missing something.

Thanks

[wamstax]

Oops
That’s what comes of using a calculator

[landlord1234]

Would there be any lettings relief in this case.

John's parents lived in the property full time as their sole residence.

[maths]

Under the new lettings relief provisions it is unlikely that LR would be available. It is necessary:

"(2)The condition is that—
(a)part of the dwelling-house is the individual’s only or main residence, and
(b)another part of the dwelling-house is being let out by the individual as residential accommodation."

Almost certainly the parents and John would have freedom to roam around the house and this would not satisfy (a) and (b) above.

However, the above provisions apply only wrt sales on or after 6.4.20 whereas John sold before this period.

Under the pre 6.4.20 rules some form of rent (wouldn't have to be market rent) would be necessary for the property to be deemed to have been "let". I doubt this applied in John's case.
LR would not apply for the period when John and parents occupied the property at the same time as PPR would apply for such period(s).

[landlord1234]

https://www.property-tax-portal.co.uk/properties-let-cheaply-what-are-the-tax-implications.shtml

suggests

And finally - capital gains tax (CGT)
When a property let at an uncommercial rent is sold the CGT pages of the landlord’s personal tax return need to be completed. Provided that the property has been let as residential accommodation (regardless of the amount of rent or the connection with the tenant), and has at some time been the landlords main residence, then lettings relief will be due on any gain made.

[bd6759]

That article is out of date. Lettings relief has been withdrawn, save for the limited circumstances mentioned by wamstax.

[bd6759]

I meant mentioned by maths.

[landlord1234]

Hi ,

I realise the article is out of date as far as sales taking place now are concerned.

However, John sold in June 2019.

Are those rules not still in place for that sale ?

Thanks