Moving back into my BTL - CGT implications?

Swiss_Toni

Having lived in a house for 4 years, I then let it for 3 years - enjoying minimal income over the mortgage.

I now want to move back in, and will no doubt sell it within 12 months....

My question (which I can't fathom out from the "easy to understand" IR site) is - "What is my liability for CGT from the £20k it has risen in value whilst being rented out?"

PS - My wife is joint owner, so I understand that we can sum our CGT allowances, I just don't know what proportion of the gain will be taxable after our allowances? (I *think* the allowances are iro £8k each, so £16k total, so am I liable on just £4k?!!!)

Cheers!!!

herbiesjp

As it is your main private residence now would tax be payable? There is no tax to pay on the sale of your main residence.

Ian_W

Hi Tony,
The very helpful HMRC site has a help sheet on residential relief - HERE.
This deals with cases where part of the time it is your PPR [principal private residence] and part of the time you owned it's not. Important section under period of ownership is:
The final 36 months of your period of ownership
always qualify for relief, regardless of how you use the property in
that time, as long as the dwelling-house has been your only or
main residence at some point.

The value it has risen whilst renting isn't material, it's the gain [after deducting buying, selling & capital improvement costs] between buying and selling that is, don't worry too much though I don't think you'll find there is much, if anything to pay. Your scenario in round figures goes something like this, if you sell in 12 months:
Owned 8 yrs, less 4yrs initially PPR + final 3 yrs ownership = 1/8 of the total gain counts for CGT [should be done in months]. Against this you can also claim "letting relief" of up to £40K, taper relief which should be about 25% and your personal allowances which I think post 5/4 are now £8.8K each.

You should report the gain [even if there is no tax to pay] with your tax return for the year the sale took place. If you do show a loss, as you most probably will unless the flat has increased humungously in value, you can't I'm afraid offset it against income tax.

HTH & BoL.