Capital Gains Tax

ManicMum

Hello

can anyone advise me please?

I have a house I let out. I have owned it for nearly 6 years and been renting it for nearly 3. I never intended to keep it that long as was going to sell but got caught up in the price freefall and couldn't sell it anyway despite trying. Anyway, will be liable for CGT come January as will then be rented for 3 years.

can anyone tell me what my CGT liability will be? I phoned IR a while ago but they were rather vague. I understand it has now fallen to 18% from 40%. Is that on the difference between what I paid for the property and what I sell it for or on the whole amount of the property when I sell it? Also, what dispensation do you get for having lived in the property - lived there for 3 years. Property owned jointly with my husband so assuming we can both use an annual allowance for CGT.

Thanks guys.

fengirl_2

I dont think you will be due to pay any CGT.
The CGT is worked out on the difference between the cost price and the sale price. The period during which you lived in it is exempt, as are the final 3 years of ownership. In addititon there is a letting exemption of up to £40,000 of the remaining gain.
If you can post actual cost price and selling price, we can give you a more precise example.

ManicMum

HI Fengirl

Bought it for £169k and reckon worth about £200k tops now. Would be looking to sell in next couple of years.

cheers

fengirl_2

OK, suppose you sell in 2 years time for £200k.

Selling price 200,000
Cost 169,000
Gain 31,000

Owned for 8 years, 6 years exempt
Exempt period 6/8 x 31,000 = £23,250
This is covered by the let property exemption, so no CGT to pay.

ManicMum

thanks fengirl. That is really helpful and much more so than Inland Revenue who waffled their way through it.

cheers