CGT - request for advice

Quietey

I'd be really grateful for advice on whether or not I need to pay CGT.

I moved back into my flat in mid December 2016 after renting it out of a number of years, having previously lived there for some time. The flat was for sale at the time, however I was undecided as to whether or not I would sell it or would continue living there. Having moved back in I realised that I would be faced with a fairly awkward commute. A buyer then made a good offer so I decided to continue with selling. The purchase was completed and I moved out in Mid April 2017.

Does this mean that the flat was my home for the almost 4 months that I re-occupied it? Is this long enough to mean that I don't have to pay CGT?

I am guessing that, sadly, the answer is probably that this isn't enough to get out of having to pay CGT, but any advice (partcularly advice to the contrary!) is welcome.

Thanks very much.

00ec25

Quietey wrote: »

I'd be really grateful for advice on whether or not I need to pay CGT.

I moved back into my flat in mid December 2016 after renting it out of a number of years, having previously lived there for some time. The flat was for sale at the time, however I was undecided as to whether or not I would sell it or would continue living there. Having moved back in I realised that I would be faced with a fairly awkward commute. A buyer then made a good offer so I decided to continue with selling. The purchase was completed and I moved out in Mid April 2017.

Does this mean that the flat was my home for the almost 4 months that I re-occupied it? Is this long enough to mean that I don't have to pay CGT?

I am guessing that, sadly, the answer is probably that this isn't enough to get out of having to pay CGT, but any advice (partcularly advice to the contrary!) is welcome.

Thanks very much.

it does not work like that

it appears it was originally your home before you let it. As such you have established a right to claim private residence relief and therefore, on the back of that original first period lived in, you automatically get the final 18 months of your ownership as exempt whether it was let, empty or lived in for those final 18 months.

so you sold in April 17 so 18 months back from there means it is exempt from Nov 15 - April 17

it is also exempt from the date you purchased it to the date you moved out and started letting it

it is liable for CGT from the date it was let to the end of Oct 15. You cannot escape that

how much, if any tax you actually have to pay depends on the exact dates and the actual figures.

read here for the calculation method:
https://forums.moneysavingexpert.com/discussion/4982708

Quietey

Thanks

I really am grateful for your clarification and see now that the answer could easily have been found on this site.

The calculation itself is also very simple now that I've googled it and found the Gov.uk "Calculate your Capital Gains Tax" web page (I had been using a much more complicated excel spreadsheet passed to me by a friend).

The calculation may be simple using the Gov.uk page but I do have some queries about the questions that Gov.uk took me through - could I again ask for your advice?

My queries are:

"Did you buy the property for less than it was worth because the seller wanted to help you?". I bought my flat under the Right to Buy scheme so I think my answer to this should be "yes" - is this correct?

And

"What was the property worth when you bought it?" - I know what the property was worth, the price I paid was different. The figure I had been using was the price I paid. This question on the Gov.uk calculator implies that the figure to use is the price it was worth, rather than the price I paid. This makes a big difference to the amount I will have to pay. Which figure do I use?

cte1111

You will also be entitled to Letting Relief, as the property was let out. This will be the lower of:

The actual gain during the let period
The PPR amount
£40,000

00ec25 - this is the nth time I have added this to your posts on this subject. If you are going to make such definite posts, you really need to remember this, as it makes a huge difference to people's decision making.

OP and others - this is why it is important to get proper qualified advice, as well meaning internet posters can sometimes miss out important information.

00ec25

because it is the .gov website and thus dumbed down aimed at "the simple", those questions are not using the jargon which would enable you to answer them correctly

Quietey wrote: »

"Did you buy the property for less than it was worth because the seller wanted to help you?". I bought my flat under the Right to Buy scheme so I think my answer to this should be "yes" - is this correct?

Jargon question: did you purchase from a connected person? answer: no

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14580

a connected person is someone who is likely to sell (or give) you an asset for less than they would ask if selling to a stranger.

Quietey wrote: »

"What was the property worth when you bought it?" - I know what the property was worth, the price I paid was different. The figure I had been using was the price I paid. This question on the Gov.uk calculator implies that the figure to use is the price it was worth, rather than the price I paid. This makes a big difference to the amount I will have to pay. Which figure do I use?

same question. You are not connected to the council and the RTB discount is ignored - obviously in that case to your disadvantage since you paid what you paid, a discounted price.

whether you have actually used the calculator correctly is a moot point since it requires you to manually calculate PRR and LR anyway. Post your workings on here if you want to know for sure....

this is the post I meant to link to earlier (post #6) as it shows the mechanics of the calculation in more detail:
https://forums.moneysavingexpert.com/discussion/5315071

00ec25

cte1111 wrote: »

00ec25 - this is the nth time I have added this to your posts on this subject. If you are going to make such definite posts, you really need to remember this, as it makes a huge difference to people's decision making..

bizarre comment

if you read what i wrote i did not explain the method at all. I linked to a thread whose purpose was intended to show the calculation in detail and in that calculation the significance of PRR and LR is fully explained

I cannot find any instances of n in a context where it was necessary to go into that level of detail in the first response. I very much doubt it went unremarked in my follow up responses where the detail was then explained... for example July 2017 was the last time we posted together: https://forums.moneysavingexpert.com/discussion/comment/72860590#Comment_72860590 I really cannot be bothered to search out other instances of n since they must be more than 6 months old and I know i have replied to CGT posts many times since then

Quietey

Thanks for pointing this out cte1111 - the thread that 00ec25 pointed me to explained lettings relief too, and how it is worked out.

I'm really just starting to get prepared on this in advance of submitting the return next year, and am taking on board all advice that anyone gives very gratefully, it's part of building up the full picture.

I am impressed by the "user friendly" nature of the Gov UK pages too. My return should be very straightforward (I made no improvements, and fit all the descriptions clearly).

Do you think it would be advantageous to submit though a qualified person, and how much should I expect to pay for this? (daft last question I know, but you clearly know more about this than I do)

Cheers!

Quietey

Ah - I'm slower at posting than 00ec25. My post of 6.45 was before I had seen the two posts before it. I'm going to post this before you get chance to post anything else .. but will be back

Quietey

OOec25 -

Thanks for above posts, including the information about Gov.uk. Useful to know. The calculator seemed so simple, I took that as being a good thing but now get that there are gaps. The figures I used for PPR and lettings relief were given to me by a friend who works in tax (not property tax)

I've had a very brief look at the linked thread in your 6.42 post and there's lots in it - got to go now but I'll have a good look at the linked thread later.

Thanks again - very grateful