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Where Taxpayers and Advisers Meet

PPR relief and CGT calculation

landlord1234
Posts:85
Joined:Sat Nov 26, 2011 3:39 pm
PPR relief and CGT calculation

Postby landlord1234 » Wed Nov 11, 2020 5:53 pm

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
Posts:1963
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: PPR relief and CGT calculation

Postby wamstax » Wed Nov 11, 2020 6:30 pm

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
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

landlord1234
Posts:85
Joined:Sat Nov 26, 2011 3:39 pm

Re: PPR relief and CGT calculation

Postby landlord1234 » Wed Nov 11, 2020 7:00 pm

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
Posts:1963
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: PPR relief and CGT calculation

Postby wamstax » Wed Nov 11, 2020 7:03 pm

Oops
That’s what comes of using a calculator
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

landlord1234
Posts:85
Joined:Sat Nov 26, 2011 3:39 pm

Re: PPR relief and CGT calculation

Postby landlord1234 » Thu Nov 12, 2020 12:29 pm

Would there be any lettings relief in this case.

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

maths
Posts:8421
Joined:Wed Aug 06, 2008 3:25 pm

Re: PPR relief and CGT calculation

Postby maths » Thu Nov 12, 2020 8:16 pm

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
Posts:85
Joined:Sat Nov 26, 2011 3:39 pm

Re: PPR relief and CGT calculation

Postby landlord1234 » Thu Nov 12, 2020 10:09 pm

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
Posts:3744
Joined:Sat Feb 01, 2014 3:26 pm

Re: PPR relief and CGT calculation

Postby bd6759 » Thu Nov 12, 2020 11:54 pm

That article is out of date. Lettings relief has been withdrawn, save for the limited circumstances mentioned by wamstax.

bd6759
Posts:3744
Joined:Sat Feb 01, 2014 3:26 pm

Re: PPR relief and CGT calculation

Postby bd6759 » Fri Nov 13, 2020 11:57 am

I meant mentioned by maths.

landlord1234
Posts:85
Joined:Sat Nov 26, 2011 3:39 pm

Re: PPR relief and CGT calculation

Postby landlord1234 » Fri Nov 13, 2020 2:10 pm

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


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