Capital Gains Question

Tintheparker

I have a house which I bought to live in and did so for a while. It's currently rented and I'm going to sell it. The potential profit will be mostly offset by private residence relief and lettings relief. The gain that is left is well under the £11000 or so that you are allowed every year. Do I have to fill out the capital gains section of the tax return or not? I can't figure it out. I looked up the help sheets and it says if your chargeable gained less that £11,000 you don't. Is the chargeable gain the gain after the allowances have been taken off?

Tintheparker

Ok I've looked at it again and I'm pretty sure I will need to fill it out. I lived in the house myself for a while, then with one lodger so I can claim full prr for that time and full prr for the last 18 months. There was a while it was fully let so will get lettings relief for that. The only bit of the calculation I'm struggling with is when I had two lodgers. How do I work out what percentage of my house was let? I had a three bed house with a kitchen, bathroom, living room and kitchen. Does the percentage go by number of rooms or total floor area? Any advice?

booksurr

are you already required to submit a tax return each year?
if yes then, because the gross proceeds from the sale are (I assume) more than x4 the personal allowance, you are required to declare the transaction even if there is no CGT payable

if no, then you do not need to report the transaction at all since there is no tax to pay (but you must keep the calculation in case HMRC challenge you as they are notified of all property sales in the UK)

see here: https://www.gov.uk/capital-gains-tax/work-out-need-to-pay

PS: taxable gain is net of the personal allowance

Tintheparker

Yes I already submit a return.

I'm not sure that's correct about not being able to apportion. This suggests it should be apportioned. I'm just not sure how the calculation should be done. http://https://www.gov.uk/tax-sell-home/let-out-part-of-home

Tintheparker

https://www.gov.uk/tax-sell-home/let-out-part-of-home

Tintheparker

I wouldn't be due tax either way as the total gain is only about 20k but I want to get the calculation right.

sheramber

Tintheparker wrote: »

https://www.gov.uk/tax-sell-home/let-out-part-of-home

In the link you gave

If you’re not sure how the rules apply to you, call the Capital Gains Tax helpline.

jimmo

For the period where you had 2 lodgers the law says that the gain needs to be apportioned in a just and reasonable manner.
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64764
There is therefore no set formula but this is how I would do it:
The non relievable part of the house is the room or rooms used exclusively by the lodgers. The rest of the house, rooms used exclusively by you and shared rooms continue to qualify for prr.
In, for example, a 7 roomed house where 2 of the bedrooms were exclusively allocated to the lodgers then 5/7ths of the house continue to qualify for prr. The other 2/7ths don’t but will qualify for lettings relief.
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64663
Whilst it is good that you want to make the strictly correct calculation can I suggest that, provided no tax is payable, the simpler you make the calculation you submit, the less chance there is that HMRC risk assessors will spot something potentially worth looking into.
If the combination of prr covering all the time when you didn’t have 2 lodgers and lettings relief covering the remainder means that no tax is payable that is sufficient for your purposes.