CGT has me stumped

ukjoel

I have looked at the govt website and am now really confused.
I really dont want to get into trouble with the taxman so would appreciate some help.

House A purchased for 90K in Dec 1999. First home.
I lived in this house Dec 1999 - Dec 2002 (3 years).

Dec 2002 - October 2009 property was rented out.

Initially this was due to me being relocated by work but in July 2005 I bought a second property (House that became my main residence. I never moved back to House A as my work required me to remain based in a different part of the country which is where House B is.

House A is now selling for 190K after 10 years of ownership.

About 10k has been spent on legitmate expenses, fees and improvements which means a 90k paper profit.

My question is that while I understand the last 36 months of ownership are exempt from CGT as property was at one point my main residence, are the years 1999 - 2005 also excempt as it was the only property I owned or just the years 1999-2002 as this was the period I was living there.

Or is it all exempt as I have been working and living in a different part of the country.

I am unsure if I should be calculating CGT on 4 out of 10 years or 1 out of 10 years or are both these wrong.

To calculate do I simply divide the profit by X number of years and then use the figure I am left with as the amout to pay (once I have deducted my annual personal allowance)?

Any advice would be appreciated, or any other good reference websites- thanks.

fengirl_2

The final 3 yrs are exempt, as is the period during which you lived in the property. In addition, up to £40k of the gain which remains chargeable is exempt as the property has been let.
The fact that you have lived in another part of the country does not enter into it.

CLAPTON

just to expand

your gain is 90,000 over 10 years (you should work it out in months really )

you are exempt for the years you lived there .. i.e. 3 years plus you have the last 3 exempt too so 6 years exempt

so exempt gain is 90,000 x 6/10 = 54,000
so still left is a gain of 30,000

you are allow letting relief for the years of renting it out (max 40k) so thats
relief of 6/10 x 90,000 = 54k so only allowed 40k

so taxable gain is ZERO

ukjoel

Thanks guys - thats fantastic news.

I had guessed the 3 years living there and last 3 years were exempt.

Didnt realise it qualified for up to 40k lettings relief but having reread the website that looks the case.

Made my day. :j

fengirl_2

We aim to please, but we dont make the law!