CGT and rental of main residence

Nourse79

Hi : We bought our house/main residence in 1995. We rented it for 16 months from June 2005 to September 2006 when we went abroad to live (not work).We came back home from October 2006 up to April 2010 when we finally sold the house. Are we liable to pay CGT next year ?
Thx 4 yr answers.

Gertie_Walker

It's very unlikely, but if you could say what the purchase and selling prices were, we can work it out for you.

00ec25

provided you lived in it for the periods you state as your (only) or main residence then it is highly unlikely you will have a CGT liability

it will be exempt for the two periods you lived in it
and
because it was rented out, and was once your main home, you can claim letting relief of up to £40,000

for example
1995 - 2010 : owned 15 years (say 180 months)
main residence for 180 -16 = 164 months so 164/180
potentially liable for CGT during 16 month rental period = 16/180

gain: lets say the differnce between sales price in 2010 and your original purchaase price in 1995 is £200,000, ie your gain is £200,000

your are exempt because of main residence for 200,000 x 164/180 = £182,222
your are entitled to have up to £40,000 letting relief

so gain 200,000 - 182,222 - 40,000 = negative number, ie you have no taxable gain and so will not pay CGT

Approximating, if your gain is less than £222,222 then you have no CGT liability, but do rework the above example using your actual figures - the calculation must be done in months not years. You can deduct legal fees and EA costs from both the purchase price and the sales price when working out your actual gain figure.

Nourse79

Gertie_Walker wrote: »

It's very unlikely, but if you could say what the purchase and selling prices were, we can work it out for you.

Sorry about delay in replying. Here are the figures : purchased in October 1995 for £103,000 gross.Sold in April 2010 for £382,500 gross.Rented from June 2005 to September 2006 incl. 'gross' means I havent' deducted the EA fees nor the legal costs. Can you work it out for me?Thks Gertie.

00ec25

as I showed you in the above example... just adjust the figures for your actual start and finish dates

you owned it for 175 months , rented it for 16 so 175-16 = 159
159/175 x (382,500-103,000) = 253,945 main residence exemption

279500 - 253,945 = <40,000 therefore the letting relief fully covers your gain during the let period

you have no CGT to pay