Property is an ex-council house purchased through one of those discounted schemes to purchase the property at a reduced rate.
Mother and I moved into this property in 1994. She purchased the property in 2003. It was probably valued at approx £85k at that time but she got it for £16k.
We continued to live in it together until around 2011/2012.
She retired and moved to Spain, and she gifted the property to me in 2011. I paid all the legal fees etc but did not pay for the property itself. At the time of this gift; the house was worth around £90k.
I’ve lived in the house ever since, 2012 to present.
I am now looking at purchasing a new home to move into with my partner. The plan was to keep this house and let it out.
If I let it out for say, 5 years, and eventually sell it in 2026 for example. As it will be my second home at that point in time, I believe I will also have to pay CGT on the rise in value from when I originally acquired it to when I sold it.
Since I didn’t “buy” it in 2012, I assume the gain will be measured from the last recorded sale price of £16k in 2003 when my mother initially bought it?
I’d expect the house to sell now for approx £96k.
So that means the gain is £80k?
Am I right in saying the amount of time I lived in it is taken into account? Is this from when I owned it or back dated to include the length of time I lived in it?
If it’s just since I owned it, am I right in saying that at the point of sale, I would have owned it for (2012-2026) 14 years - as I lived in it for 9 of those years, the gain would be treated as 5/14th of the £80k or £28.5k.
I am on a high tax band, so I assume that means CGT owed is 28% of that £28.5k = £7,950. As this is below the £12k per year CGT allowance, does this ultimately mean I’d still pay £0?
Seems to good to be true but would be ideal if so.
Lastly, does the fact I am renting the house out from next year for the next 4-5 years give me any other tax allowances that might reduce CGT if I indeed to have to pay more than I thought? (I don’t know what Letting Relief is or if it also applies here?)
I am in Glasgow, Scotland.
Thanks for your time. Sorry for the long post!
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