CGT on let properties once lived in

[MattG650]

Hi everyone

I wonder if you can help with this scenario:

MArried couple living in rented accomodation looking to sell one of 2 let properties.

Property 1 purchased for £95,000 in March 2001 lived in until April 2003. Since then property has been let. Value now £180k. In wife's name only, purcashed prior to marriage.

Property 2 purchased July 2004 for £300k lived in as couple until July 2007. Since then property has been let and couple moved into rented accom.Vale now circa £324k.

No election for main residence has been made.
I;m not clear on whether leeting relief can apply to both properties and how PPR can apply to the property 1 at any stage since purchase.

Trying to ascertain CGT situation to aid selling decision.

Any comments would be gratefully received.

many thanks and regards

M

[al_eebee]

On the face of itno CGT on Property 2 and probably negligible if any on property 1.

P2 will have the benefit of final 3 years exempt

P1 will be exempt for wife 3/01-4/03 + final 36 months, which on a sal now would leave a smallish gain covered by letting exemption

Gross gain £85k
PPR £85 x 61/86 £60k
Net gain £25k
Letting relief lesser of
i) 40k
ii) 60k
iii) 25k

Net gain - NIL

[MattG650]

Thanks for the swift reply.

Just to clarify PPR, does this mean they effectively have it on Property 2 and Property 1 as I thought it could only be claimed once - however it;s likley I;ve got teh wrong end of the stick.

thanks again

M

[MattG650]

sorry al_eebee

realised my mistake as only selling one property but is there an issue with notification for PPR within 2 years (as I've read from other threads)?

M

[al_eebee]

There is no problem with notification. Both properties have been lived in as Principal Provate Residence (PPR) at different times so will qualify.

What you cannot do is have two properties as your PPR at the same time, not only ever have one claim. That is subject to the proviso that relief may be due at the same time on two properties as a result of the "final 36 months" extension allowed by legislation.

That extension was originally 12 months, but was extended some years back when there was a property market similar to that today when you cannot give away property.

So PPR will be due on both properties in the circumstances you set out.

It would only be available on one in a case where, say, a couple had a property in town that one or both lived in for work during the week, as well as a property in the country that they fled to at the weekend, or perhaps the family lived in during the week whilst one spouse worked away & lived in the town property

[al_eebee]

Sorry, typing too fast the second para makes no sense at all. Let me try again.

In a case like that in the final para there will only be one residence that will qualify as PPR at any one time, and in the absence of an election that would be determined on the facts. What you can do to get some measure of relief on both properties is submit an election on one property within two years of an election becoming relevant and then vary that later.

What you have is

P1 owned by wife and lived in as her PPR for two years. So as a matter of fact PPR relief is due for thise two years, and because PPR is due as a matter of fact the final 36 month extension comes into play when determining the amount of relief due.

P2 owned jointly and used as PPR by them both as a matter of fact for three years from Jul 2004-Jul 2007

[MattG650]

That really does help.

Many thanks for all your comments

M