Capital gains tax on property.

sweetmale

Hello Everyone

I need a little help with CGT.

My wife bought a property in April 1997 and lived in it until end September 1999. She then let it out and my wife either lived at her parents or rented another property.
She moved back to the house for 3 months from April 2005 - June 2005. She then let it out again from then until March 2010. It was sold in May 2010.

We bought a house together and lived in it from December 2007 and are still in it now. This is and was our main residence.

Bought property - £71,000
Fees - £2000
Improvements - £10,000
Sold property - £300,000
Fees - £10,000
CGT tax free amount - £10,100

She owned the property for 157 months.
Lived in it for 33 months as her main residence.

Am i right in thinking she can claim private residents relief for the months she lived there in addition to the final 3 years? IE 69 months private residents relief?

My working out of the tax is: £197,000 gain
56.1% tax due on £197,000 from private residents relief - £110,517
18% tax rate on £110,517 = £19,893.06.

Is this correct or am i missing something?

Please help.

jimmo

Bought £83000
Improvements £10000
Sold £290000
Gain £207000
Main residence relief (207000*69/157) £90975
Letting relief (max) £40000
Total relief £130975
Non exempt £76025
annual allowance £10100
Chargeable to tax £66025
Details are here
http://www.hmrc.gov.uk/helpsheets/hs283.pdf
The tax chargeable depends on her other income.
http://www.hmrc.gov.uk/rates/cgt.htm#3

antrobus

"For gains on or before 22 June 2010, Capital Gains Tax is charged at a flat rate of 18 per cent" says HMRC. Since the property was "sold in May 2010" I think we can safely say that OP will be liable for CGT at a flat rate of 18%.

sweetmale

Thanks Jimmo I forgot about the lettings relief, That has saved me £7000 in CGT.

Yes Antrobus it will be 18% as my wife is not in the higher tax bracket.

Thanks for all your help.