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CGT Lettings relief
saintalan
Posts: 562 Forumite
Can aybody help explain the bolded part below with regard to extra Lettings Relief on CGT through letting a home you have previously resided in?
The IR gives an example where there is a split occupation between yourself and tenants, however I am trying to establish, if/how this would apply (after living in the property for say 10 years and adding 3 years (not resident) allowed by the revenue before CGT) for any subsequent years e.g in this case the 14th year. I appreciate it would be the lower of the 3 below but would they mean a percentage based on 1/14th?
Hope that makes sense!
Alan
LETTING RELIEF
If you only get partial relief because you have let some or all of
your dwelling-house as residential accommodation, you may be
entitled to a further relief. This further relief is due where:
• you sell a dwelling-house which is, or has been, your only or
main residence, and
• part or all of it has at some time in your period of ownership
been let as residential accommodation.
The amount of relief is the lowest of:
• the amount of private residence relief already calculated, or
• £40,000, or
• the amount of any chargeable gain you make because of
the letting.
The IR gives an example where there is a split occupation between yourself and tenants, however I am trying to establish, if/how this would apply (after living in the property for say 10 years and adding 3 years (not resident) allowed by the revenue before CGT) for any subsequent years e.g in this case the 14th year. I appreciate it would be the lower of the 3 below but would they mean a percentage based on 1/14th?
Hope that makes sense!
Alan
LETTING RELIEF
If you only get partial relief because you have let some or all of
your dwelling-house as residential accommodation, you may be
entitled to a further relief. This further relief is due where:
• you sell a dwelling-house which is, or has been, your only or
main residence, and
• part or all of it has at some time in your period of ownership
been let as residential accommodation.
The amount of relief is the lowest of:
• the amount of private residence relief already calculated, or
• £40,000, or
• the amount of any chargeable gain you make because of
the letting.
0
Comments
-
***Boardguide comment***
saintalan,
I have moved your thread to the Housing board where you might get more replies.Torgwen..........
...........0 -
OK, I'm not an accountant but I think this is correct:
You buy a house for 100000.
You live in it for 10 years
You sell it after 15 years for 250000
The total gain per year is 150000/15 years = 10,000
Private residance relief = £10,000*13 = 130000
so only 20,000 of the gain is subject to CGT - however you get letting relief of the lowest of these amount:-
130000 (prr) or 40,000 (the 40k amount above) or 20,000 the actual chargeable gain on the property.
In this case your relief is 20K and no CGT is payable. (You cant have 130000 or 40000 releif as you haven't got a gain that big)
Normally you use months for establishing the gain as rarely does somebody live for exactly 10 years in a house etc.0 -
RabbitMad wrote:OK, I'm not an accountant but I think this is correct...
Thanks, that was my feeling until I read something on the Motley Fool that seemed to say it was as per the Revenue example, in other words, if you shared the property with the tenant, otherwise it seems to indicate that only the first 2 points apply, ie the lower of the residence relief or £40k.
I'm a way of worrying anbout it but would like to sort it for my predictions!
Cheers
Alan0 -
I agree with Rabbitmad, but I would add that you would get relief for the time you live in it AND the final 3 years of ownership.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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Also is Taper Relief applicable?
Thanks
Alan0
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