capital gains

fleece123

I recently have split with my boyfriend and we agreed that I would have the buy to let as my main residence now to live in. There is no mortgage on the property but I am not sure if he paid tax on his rental income. If I sold the property in 6 months time and had to pay any CGT (if required), would HMRC pick up on the previous rent ? Or would it be best to live in it for 3 years and claim PPR or take a chance and say nothing..

silvercar

Is the property in joint names? If so, is it being transferred to your name now?

When did you buy it? Buying price? Likely selling price and time of selling?

fleece123

Property has been transferred to my name only, buying price was £150,000, selling price I am guessing at around £210,000 according to estate agent. Was thinking of selling in 3 months. We bought it around 2002. Thanks

silvercar

When you transferred the property to your name, your ex had a CGT laibility based on the gain he has made on the half he transferred to you. Presuming he has never lived in it, then his half has gained from 75k to 105k, so a gain of 30k. If he hasn't used his CGT allowance elsewhere he can put that against the gain, leaving 30-10.1=19.9k taxed at 18%= £3,582.

You have one half of the property owned since 2002 showing a gain of 30k and the other half not really showing a gain. So without living in it you have the same liability as your ex.

By living in the property as your main residence you gain exemption from CGT for the last 3 years of ownership and the time it was your home. So just by living in it for a few months (provided the revenue accept this as genuine) you get 3 yrs exemption and letting relief.

Rough calculation:
30k gain: 3yrs exemption out of 8 years ownership= 3/8 x 30 = 11.25k.
letting relief minimum of (PPR relief is 11.25k, gain while letting and 40k)=11.25k
CGT allowance = 10.1k
Total reliefs exceed gain, so you have no CGT to pay.