Capital Gains Tax (CGT) - Any liability?

Bluejam

Hello all,

I recently received a letter from HMRC advising that they are currently undertaking a campaign on CGT from property sales. They note that I might be liable for CGT from a property I have sold.

I have looked at the advice on the HMRC website, including the 'Private Residence Relief' (PPR) Helpsheet, and I am looking for further opinion and guidance as to whether I would have any CGT to pay on the sale of that property.

The property was purchased in October 2005 and sold in August 2008. There was a £29,000 gain on the sale price compared to the purchase price. I owned it for this entire period but I moved out of the property in August 2007, when I bought a second home (which I have lived in since). From that time I rented it out until the sale date (albeit the property was empty/not let for the last 4 or 5 months).

My question is, do I have any CGT liability?

My understanding was that I do not, as I would qualify for PPR for the entire period of ownership and for the entire gain. This was based on the following from the HMRC website and Helpsheet:

"

The final three years (36 months) always qualify for relief. This applies even if you weren't living there during the final three years. It must have been your only or main home at some point during the time that you've owned it.

"

I therefore thought that the available 'Letting Relief' would not come in to the calculation.

Is my understanding of this correct?

Any help would be greatly appreciated!

Tixy

Yes your understanding is correct.

You have no tax to pay on this property as its classed as your PPR for the whole time, reply to HMRC with the details of relevant dates and that should be the end of the matter.

John_Pierpoint

Presumably you did get assessed for the rental income and explained that it did no more than cover your mortgage costs?

Bluejam

Thanks very much Tixy, that is reassuring. I will respond to HMRC and seek their confirmation that the matter is closed.

John_Peirpoint, I wrote to HMRC at the time in respect of the rental income, setting out my costs (mortgage, maintenance etc.) and gains from rent. My calculations demonstrated a slight loss. HMRC responded to me confirming their was no income tax liability as a result.