CGT query

tiamaria

Hi apologies for this as i've asked this question on here a long time ago but I'm aware the CGT rules were changed last year hence our situation probably has too.

How much CGT approx would OH have to pay ?

OH's bought his property summer 2005 £21000 but previously lived in by OH (rented as opposed to owned) for many years

OH rented to tenant from then till now apart from a couple of months

we would expect it to sell for about 95k.

IFA says we should prob have to pay about 9k CGT but aren't we entitled to some letting relief?

Tia

fengirl_2

Its hard to give you an answer without knowing when the property is sold. The final 3 yrs of ownership are exempt, so if he bought it July 2005 and sold it July 2009, then only one year would be chargeable, thus:

Sale price 95,000
Purchase 21,000
Gain 74,000

Exempt gain 3/4 x 74,000 = 55,500
Chargeable gain 18,500
Less costs and annual exemption of course.

There is no letting releif if he has not lived in the house since he bought it.

tiamaria

Thanks for replying.

He lived in the house for 6 weeks after he purchased it before letting it.

However in the scenario you mentioned above does that mean he would have to pay 18% of £18,500 which would be about 3330k? Just so i can get the formula to work it out right in my head!

What is annual exemption ?

fengirl_2

As he lived in the house after he owned it and before letting it, the 6 weeks is also exempt. The letting exemption would also be due and as the maximum is £40k, the whole gain is covered by this, so no CGT to pay. However, HMRC might well query the short period of residence after purchase. They may argue that this was an avoidance measure, so he needs to take advice forom a tax specialist.