cgt rented property ,previously lived in

kate2954

Hi - can anyone enlighten me please - have looked on HMRC but still confused ! I have just sold a house for 163000, which was bought for 59950 in May 1998. I lived in the property until December 2005 , after which the property has been tenanted until Feb 2013. The house has had some improvements made over the years. Tax has not been paid so far as the gains from rental income have been offset against losses from insurance,maintenance etc . I am a basic rate tax payer. Wondering, are there any allowances/excemptions, especially during the time I lived in the house from CGT
thanks in advance

00ec25

so you've been letting a property for 8 years and only now are you bothering to research your tax position :eek:
at least you seem to understand the calculation must be in months :T

ownership period to April 2013 = 180 months
gain 103,050

1. private residence relief
due to occupation may 98 - dec 05 = 92 months
private residence relief due to deemed occupation in the final 3 years of ownership arising from fact was once your main home (aka "the 3 year rule") may 2010 - april 2013 = 36 months

total PRR = (92 +36)/180 x 103,050 = 72,280

2. letting relief (due to its once being your main home)
LOWER OF :
a) PRR 72,280
b) gain during let period (180 - 92 -36)/180 x 103,050 = 29,770
c) max capped amount £40,000

letting relief = 29,770

3. personal allowance
tax year 12/13 rate 10,600 (ie sold by 5 April 13)
tax year 13/14 (sold on or after 6 April 13) £10,900


Taxable net gain
103,050 - 72,280 - 29,770 - 10,600 = negative number
you have zero taxable gain so NO TAX TO PAY and in reality, as you can see, have not even touched your personal allowance which therefore remains totally unused and available for other taxable gains should there be any in 12/13 (note it does not roll over to next year - "use it or lose it")

NOTE because of the sums of money involved (ie proceeds from the sale are more than x4 your personal allowance ie >£42,400,) even though no tax to pay, you are still required to inform HMRC of the fact you have sold the property

kate2954 wrote: »

Tax has not been paid so far as the gains from rental income have been offset against losses from insurance,maintenance etc .

i thrust that means you have been declaring your income each year otherwise you are in for a nasty shock when HMRC penalises you for non declaration notwithstanding the fact you have not made a taxable profit

kate2954

Thanks for your help - yes have declared losses and gains, though HMRC have told me they dont need to hear from me until sell the house or income generating a profit, hence why I am only considering tax position now