advice on CGT on second property please

ruthers01

Hi, a subject i see covered a few times but i need advice on my personal position if possible.

I have a 2nd property which i bought in June 1996 for £89,000
I lived in this as PPR until Nov 2006 (125 months).
Then in Nov 2006 i moved into my current PPR and have rented the original property out since.
Probable market value now of original property is around £250,000

I'm wondering whether i need to sell the original property before the 36 month exemption period has ended in Nov 2009. If i don't sell before then and, say, sell a year later in Nov 2010 what are the CGT implications for me?

Alternatively can i avoid CGT by simply moving back into the property before Nov 2009 as my PPR for a few months and then sell it and avoid CGT?

I have tried to fit other threads advice into my circumstances but i get confused transposing my figures into others so forgive me if this question seems familiar!

Many thanks

Simon

silvercar

If you sold in Nov 2010 you would have 12 months of gain that wouldn't be covered by PPR relief.

If gain was 250-89=161 less say 5k for buying and selling costs = 156k.

161 months exempt out of 173 x 156k gain = 145.2k exempt, so 10.8k chargeable.

You have CGT allowance currently 9.6k so would pay 18% tax on 10.8k ie £1,944.

If you wanted to move back in to avoid this charge, you would have to do so properly, the costs of which may outweigh the benefit.

ruthers01

Thankyou very much Silvercar & Jimmo, that has helped alot. :T
I was concerned that i would be liable for CGT on a much bigger proportion of the profit so what you have outlined is a big relief (please excuse the pun).

Can you just clarify one point about the part about about having 9.6k CGT allowance currently. I think that is the current tax free allowance but am not sure how that worked into your calculation or was it not included because the total profit of 156k would be bigger?

Thanks again
Simon

silvercar

oops! Brain too cold to function properly.

The crystal ball question is what will your home be worth in November 2010?

ruthers01

thankyou once again, that really does all make sense now. I realize now there is no desparate need to sell before Nov09 (unless house prices look like they are to slide further). That aside I now have options to continue renting or move back in and do it up with a view to sell now i know the CGT is a minimal concern.
Thanks guys, this really is a priceless forum and much appreciated,

Simon