Selling rented property

devbzs

Hello. I have a question regarding selling my property. I am a retired pensioner. I bought my first home in 1977 and I lived there for 28 years until 2005 when my wife and I moved to live with my son in his property. I have rented my old house since 2005 and now my tenants have moved out and I would like to sell my property. Can you please explain the tax implications of selling my house?

Slithery

How much did you purchase it for?
How much are you hoping to sell it for?
Purchase date? MMYY
Date it stopped being your main residence? MMYY
Date you hope to sell? MMYY

markin

Some light reading for you.
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2019

devbzs

How much did you purchase it for? £14,000
How much are you hoping to sell it for? £600,000
Purchase date? April 1977
Date it stopped being your main residence? April 2005
Date you hope to sell? July 2019

saajan_12

devbzs wrote: »

How much did you purchase it for? £14,000
How much are you hoping to sell it for? £600,000
Purchase date? April 1977
Date it stopped being your main residence? April 2005
Date you hope to sell? July 2019

GAIN: £586k. This may be reduced by any buying/selling costs, capital improvements..

PERIOD OF OWNERSHIP: 507 months

PPR: You get Private Residence Relief for the 336 months you lived there and the final 18 months of ownership (this will change April 2020) provided these don't overlap. So PPR is for (336+18)/507 = 69.8% = £409k

LETTINGS RELIEF: You get Lettings relief for the proportion of time you let the property, capped at the lower of your PPR and 40k per person. This is 153 / 507 months = 30.1% = 177k, so you'd get the cap of £40k. This calc will vary if its owned by more that one person.

ANNUAL ALLOWANCE: You get £12k annual allowance each (again is the property owned jointly or just in your name? do you have any other capital gains this year?).

Total taxable gain = 586k - 409k PPR - 40k LR - 12k AA = £125k

On that, you'd pay tax at 18% upto the basic rate threshold and 28% above that once combined with your income.

Key questions to refine the above calc:
* buying / selling costs (eg solicitors, EAs)
* Cost of capital improvements (only major works that add value eg extension, not regular maintenance)
* How many owners and in what shares?
* Any other capital gains (ie investments you're selling this tax year)?
* Salary / total other income this tax year?