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Where Taxpayers and Advisers Meet

Disposal of second property (old home)

Olga S
Posts:16
Joined:Wed Feb 10, 2016 12:55 pm
Disposal of second property (old home)

Postby Olga S » Wed Apr 06, 2022 10:56 am

Dear all,

My husband and I are about to sell our previous first home which we have owned for 24 years and moved in and out of, therefore occupied ourselves for approximately half that time.

For the other 12 years it has been let with a few gaps here and there.

We have filed tax returns for the years it has been let, which have losses of about £3,000 a year I’ve the most recent years from 2017 -2021.

I’m researching the CGT calculations in regards to the relief we are entitled to. I believe we have a personal allowance, private residence relief and also Lettings relief -

Do you think this is a calculation I can complete myself or best to pay an accountant for the service ? I’d rather donate some money to charity and attempt the calculation myself if I can.

If any kind soul would like to walk me through the calculations I’d be very grateful.

Many thanks in advance and best wishes.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Disposal of second property (old home)

Postby maths » Wed Apr 06, 2022 1:43 pm

Who owns the home?

I assume you own the home as joint tenants ie 50/50. If so on a sale any gain is divided between you and you each have a potential CGT liability.

Lets assume original cost of property was say 200,000. Let's assume today it's worth 300,000 (figures purely illustrative).

Each CGT computation as follows:

Sale 150,000
less Cost 100,000

Gain 50,000.

less Private residence relief [12.75/24] x 50,000 = 26,562

Net gain 23,437

less annual exempt amount 12,300

Net taxable gain 11,137.

Capital gains tax between 18% and 28% of 11,137

Notes>

1. Actual CGT liability depends upon your income tax position

2. No lettings relief as relief basically withdrawn.

3. You each own 50/50.

4. Period of occupation for relief purposes is 12 years plus a period of 9 months (9 months given by legislation).

5. You didn't own any other homes in which you lived.

Olga S
Posts:16
Joined:Wed Feb 10, 2016 12:55 pm

Re: Disposal of second property (old home)

Postby Olga S » Wed Apr 06, 2022 2:32 pm

Hello Maths,

Many thanks for your reply.

Yes my husband and I joint own the home.

Purchased for 72,500. Selling for 439,000.
We lived in it about half the time on and off and rented it out the other times.

Will be also be entitled to Lettings relief on top of PRR ? We also spent quite a bit over the years on works such as kitchen. And bathroom, gas pipe work, new drainage, new boiler etc. how much of that can we claim for ?

The Lettings often ran at a loss too.
I’ve had a look at some calculators. Was unsure how much we can claim for for works and also if we are entitled to Lettings relief.

Many thanks

Scotty1904
Posts:3
Joined:Tue May 03, 2022 2:12 pm

Re: Disposal of second property (old home)

Postby Scotty1904 » Tue May 03, 2022 2:29 pm

You can offset costs of enhancements to the property ie extensions but not repairs or replacements

Letting relief is only available if you live in the property with the tenant.


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