Capital Gains Tax Calculation help please..

primrose_primrose

Dear MSE community,

I would really love your help calculating how much the tax man would eat if i sold my flat. I'am currently renting it out and living on a rented boat, and trying to ascertain whether i would in fact be better from a CG point of view to move back into the flat.

The facts!

Purchased in June 2008 for £300k
Sold (hypothetically) in October 2014 for £475k
Lived in June 2008 to September 2012
Rented out from September 2012 to present

Thank you so much for your kind help.

booksurr

you are liable to CGT for a 7 month period but there is no tax to pay as it is covered in full by available tax relief

ownership period 77 months
lived in 52 months + final 18 months of ownership ("deemed occupancy period") = 70 months
(liable) let period 77 - 70 = 7

1. Gross gain 175,000 (less any legal fees and SDLT on purchase and legal and EA fees on sale)

2. Private Residence Relief: 175 x 70/77 = 159,090

3. Letting Relief: lowest value from:
a) PRR
b) gain in let period (excl deemed occupancy) 175 x 7/77 = 15,910
c) max allowed 40,000

4. personal allowance £11,000 (14/15 rate)

5. Net Taxable gain = 1-2-3-4 = ZERO taxable gain. No CGT to pay

primrose_primrose

Thank you so much booksurr! We really appreciate it. It's great news and quite unexpected! Can we calculate if there would be CG due if we sold in october 2015 under the same terms and carry on renting it out for another year? + how do i thank you on this thing!?

sorryitsme

Sorry to hijack this thread, but the response to questions has been great and I too have a CGT question.

A friend of mine purchased a property as a BTL in Jan 2011 for £240,000. They have developed the property and have recently had it valued at £550,000. The property has been rented during the time of ownership and has been managed by an agency.

They spent approx. £60,000 doing the property up and are considering selling.

What sort of CGT do you think they could be liable.

Thanks in advance:A

Kynthia

sorryitsme wrote: »

Sorry to hijack this thread, but the response to questions has been great and I too have a CGT question.

A friend of mine purchased a property as a BTL in Jan 2011 for £240,000. They have developed the property and have recently had it valued at £550,000. The property has been rented during the time of ownership and has been managed by an agency.

They spent approx. £60,000 doing the property up and are considering selling.

What sort of CGT do you think they could be liable.

Thanks in advance:A

They won't have any PRR or Letting Relief as they bought it to let out and it was never their home. However when calculating CGT you can deduct the buying and selling costs as well as capital expenditure on the property (plus their annual allowance).

As they have a significant amount of gain and are likely to be liable for a fair amount of tax, they should take all of their documents and proof of expenditure to an accountant for professional advice.