Sale of second property - Capital Gains Tax liabilities?

Bluejam

Hello all,

I purchased my first property in September 2005 for £58,500, which I lived in until June 2007. Immediately prior to moving out, I re-mortgaged the property to the value of £69,000 to release some equity to put towards my second property. I purchased my second property later in June 2007 and still live here today.

The first property was rented out to a mixture of private tenants/sibling for the period of July 2007 to March 2008 (although I suspect I made a loss or only a small profit in this rental period - i.e. lower than £300.00). During my ownership of the property, some improvements were made to it. I sold the first property in June 2008 for £87,500.

I am therefore seeking advice on my CGT liabilities in the gain made in the sale of this asset, and to get clarification of what figures are used to calculate this liability. Also guidance as to whether I am required to fill out a self assesment for for the rental 'income' is also welcomed. Any help whatsoever is greatly appreciated.

Regards,

Bluejam.

The_Tax_Man

There is no capital gains tax to pay. You are able to take primcipal private residence relief for the period you lived in the house and 'deemed' PPR for the last three years of ownership (which happens to cover the whole period anyway).

Bluejam

Thanks for your reply Tax Man. I was under the impression that the rules changed in April 2008, for this tax year, so that such relief was no longer available (i.e. considering that I lived in the property for a period of time)? I read that this sparked a lot of people to sell buy-to-let properties prior to the end of the last tax year.

But it would obviously be great news if it does apply to my situation, thanks. So I am assuming I won't have to formally complete any form/assessments to 'declare' the PPR relief as there's no case to answer, so to speak?

Regards,

Bluejam.

CLAPTON

indexation and taper reliefs were abolished in the 2008 budget
but PPR and letting relief still remain...
you have no CGT to pay
although there is not enough information to say whether or not you need to pay any tax on the rental income.

Bluejam

Ah, I thought I may have got the wrong end of the stick; thanks for clarifying, Clapton. That really is good news, and I feel that there's now probably no point speaking to a tax advisor about the CGT issue. Similarly I am quite confident that the rental income falls below the £300.00 threshold, but I will look in to that further.

Thanks very much all!