Capital Gains Tax only one property

Greentea

Does anyone know, so you still have to pay CGT, if the property you are selling is your Principal Private Residence and is the only property you own?

My situation is that I did rent out this property for two 1/2 years when I purchased it, and have since lived in it for two years.

From what I understand I will still be liable for CGT on a proportion of the profit.

Can anyone confirm my understanding.

thanks

Ian_W

Hi Greentea,
Yes, I believe you are liable for CGT but because it has been your PPR at some point the final 3 years ownership are exempt, not just the 2 yrs you've been there. There's an HMRC helpsheet at http://www.hmrc.gov.uk/pdfs/2003_04/capital_gains/ir283.pdf which deals with this and letting relief.

I think the gain between buying & selling prices [less buying & selling costs and any capital improvements] would be apportioned as follows. 54 months owned [say], less 36 months exempt for residential relief = 18/54 is potentially taxable. Then you can apply letting relief [as per helpsheet] and non-business taper relief of 10%. Finally your £8.5k CGT allowance before arriving at a taxable gain which is payable at your marginal tax rate.

HTH, please do get it checked by an accountant as this is only a layman's opinion.
BoL.