CGT - Principal Private Residence question

pie81

Hi all

I'd be really grateful if anyone can shed some light on the following:

My husband E jointly owns a property with his brother in Wapping. They bought it in 2002. E lived there from 2002-2005.

I own a property myself (bought in 2005). E moved in with me later in 2005. We got married this year.

From 2005 to now the Wapping property has been occupied by E's brother plus tenant (a variety of tenants). The tenants pay rent to hubby.

E and his brother now want to sell the Wapping place. total increase in value since buying = about £150k so E's share of the profit = £75k.

Question is, will there be any CGT payable by E on his share of the profit?

I think not as he can take advantage of the PPR rule plus lettings exemption. But can anyone with more knowledge confirm this?? does the fact that we have now got married cause any issues?

thank you!!

fengirl_2

Yes, the period of occupation is exempt (about one third of his share of the gain), plus the final 3 yrs of ownership, plous up to £40k letting relief, so I dont think there will be any CGT to pay. Your marriage makes no difference to this.

00ec25

yep - no CGT due

owned for 8 years (2002 - 2009)

2002 -2005 - 3 years - exempt under PPR
2007 -2009 - 3 years - exempt under last 3 years ownership rule
2005 - 2006 - 2 years - potentially taxable but can claim letting relief

calculation should be in months, but lets stick to years as thats all you've given, so

PPR relief = 6/8 x75,000 = 56,250

Lettings relief = LOWEST OF:
a) PPR relief: 56,250
b) Lettings gain (75,000 - 56,250 ) = 18,750
c) absolute cap 40,000

so the lettings relief is the lowest figure @ £18,750 and because you have not hit the cap, you have no CGT liability because your total relief available equals your total gain ie. 56,250 + 18,750 = 75,000 so gain is fully relieved.

pie81

thank you both very very much!