This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

CGT on rented/ppr property

adam-kirkwood
Posts:2
Joined:Wed Aug 06, 2008 3:08 pm

Postby adam-kirkwood » Thu Mar 10, 2005 12:55 pm

Please could you give me some advice on the following:
I bought my house in July 2001 (£87,500) and rented it from 1/9/01 to 5/12/03 (with 6 months unoccupied between lets). I then moved into the property on 22/2/04 until 24/9/04 and have rented it out again from 2/10/04 to 31/8/05. Could you please advise how much CGT I will have to pay if I sell the property in Sept 05 (value £175,000) or what the tax implications are if I carried on renting the property out.

Sherlock
Posts:79
Joined:Wed Aug 06, 2008 3:21 pm

Postby Sherlock » Fri Mar 11, 2005 7:58 am

The actual gain on the property before taper relief is estimated at £87,500. The property is time-tested over the period of ownership. As you have occupied it, admittedly for a short period, it is your principal private residence.

The period of ownership is just over 4 years to Sept 2005. The final 36 months are exempt, which means that the exempt gain is over £60,000. On top of that you can claim lettings relief of £40,000 or less if the exempt gain is smaller than that figure (which it isn't).

There would therefore be no tax on sale in Sept. 2005. If you continued letting the above principles apply, and in addition what is known as
taper relief applies, as well as the annual CGT exemption (currently £8,200). Any tax due would depend on the figures and period of ownership at the time.

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Mon Mar 14, 2005 2:49 am

I am not sure the full £40,000 of Lettings Relief will be available, as the 2nd letting period falls within the exempt 36 month period.

However, this will not effect the tax calculation which still remains Nil.

But the 7 month period of occupation *might* be open challenge by the IR that this property was not your PPR, depending on the full circumstances.


Return to “Capital Gains Tax, CGT”