Selling property and Capital Gains Tax

emmb

Hi

I wonder if anyone can clarify the rules for me and give me some advice..

As far as I understand it, capital gains tax does not have to be paid ifhouse is your own home.

I think I heard somewhere that if renting a house out which you have had as your home in the past that there is a period of time of rental that Cgt is not paid..and maybe that it is pro rata after that period. In other words, the life of time you have owned it and percentage of time as home v rental is percentage allocated as cgt free.
Is that correct?

I hsve a property I can no longer access after an accident and has been left empty since. Crunch decision time is looming as to whether do repairs necessary to rent out v selling the property. There are other factors involved that will also influence which way the decision goes, but I would like to know where I stand with CGT depending on either situation. I lived in it for 12 years.

Thanks

booksurr

here is a worked example which covers the key principles...
http://forums.moneysavingexpert.com/showpost.php?p=69071134&postcount=6

a) if I read your post correctly as things stand at the moment you would get PRR for the time you actually lived there + the final 18 months of owenership. The rest would be liable

b) if you were to now let it out you would: PRR as above plus you would also get LR for the period it is let, the latter subject to the 40k cap

in both a) and b) you would get the personal allowance as well

emmb

Hi
Thanks sooo much to booksurr for replying and for the link. :-)
It is very comprehensive and gives soo much info'.

Am not familiar with the terms..
Private resudent relief and letting relief nor what the personal allowance applies to. Am guessing these are just allowances to give grace before tax has to be paid. Not sure why there is a personal allowance aswell as the other two but hey, not knocking it. Wonder how long before the government close those down though. :-(

Good to know you get 18months grace before cgt is a consideration!
Also, good to see that member in the example had zero cgt at that time or for time in the future depending on values etc.

Will take me some working out based on the example whether delaying getting it tananted goes against me or is a benefit...?
Tbh I have so much other stuff going on, medically etc, the hassles involved in making the property my priority are too much, but was getting concerned might be doing my future financial situation more harm by leaving it til I can deal with it. Time flies as they say. Already been 3 n half years! Grateful for any comments?

It does raise another couple of queries..

Term Main Residence. Strictly speaking as it stands I am renting elsewhere so guessing that is my main residenceHowever, I do pay utility bills at my ownproperty (limited to an outside light being on etc but still utility bills and in my name) and I still pay council tax there. Might it still be considered my home?

My other query is Regarding the Private Residence Relief:
If you bought then sold your own home but did not 'reinvest' all the money in a new home ie in case of downsizing, would you have to pay cgt on profit above the allowance?
I know it is a different scenario to mine but just to understand way the things work, as I had thought don't pay cgt on your own home by which I mean. The one you live in or main residence I guess is the term. I mean, that is why people downsize generally, to free up cash

Cheers

silvercar

Term Main Residence. Strictly speaking as it stands I am renting elsewhere so guessing that is my main residenceHowever, I do pay utility bills at my ownproperty (limited to an outside light being on etc but still utility bills and in my name) and I still pay council tax there. Might it still be considered my home?

Generally speaking your main residence is where you live. In your case it would be the property you are renting.

My other query is Regarding the Private Residence Relief:
If you bought then sold your own home but did not 'reinvest' all the money in a new home ie in case of downsizing, would you have to pay cgt on profit above the allowance?
I know it is a different scenario to mine but just to understand way the things work, as I had thought don't pay cgt on your own home by which I mean. The one you live in or main residence I guess is the term. I mean, that is why people downsize generally, to free up cash

Irrelevant. What you do with the money doesn't influence the CGT calculation. If it was your main home for all the time you owned it or any time it wasn't your main home is covered by the various allowances, there is no CGT to pay.

kinger101

emmb wrote: »

..
Term Main Residence. Strictly speaking as it stands I am renting elsewhere so guessing that is my main residenceHowever, I do pay utility bills at my ownproperty (limited to an outside light being on etc but still utility bills and in my name) and I still pay council tax there. Might it still be considered my home?

No. You don't live it in so it's not your main residence any more.

emmb wrote: »

..
My other query is Regarding the Private Residence Relief:
If you bought then sold your own home but did not 'reinvest' all the money in a new home ie in case of downsizing, would you have to pay cgt on profit above the allowance?

I don't know why you thought this. I don't understand what allowance you are referring to. There will either be some CGT to pay or their won't. I think perhaps you've been reading (and misunderstanding) rules on what is called rollover relief on business assets, which are not relevant here.

emmb wrote: »

.

I know it is a different scenario to mine but just to understand way the things work, as I had thought don't pay cgt on your own home by which I mean. The one you live in or main residence I guess is the term. I mean, that is why people downsize generally, to free up cash

Cheers

Just plug your numbers into booksuur's worked example or employ an accountant to do so. I don't know why you've gone off on a tangent when you've essentially been given the answer.

booksurr

emmb wrote: »

Am not familiar with the terms..
Private resudent relief and letting relief nor what the personal allowance applies to. Am guessing these are just allowances to give grace before tax has to be paid. Not sure why there is a personal allowance aswell as the other two but hey, not knocking it. Wonder how long before the government close those down though. :

it is disappointing that you haven't done even the most basic of google searches then isn't it. As for Govt policy I take it you haven't noticed that actually the Tories are in favour of reducing tax on capital, not increasing it.

Read pages 1,2,3 & 5 at least....
https://www.gov.uk/capital-gains-tax/overview