CGT on previous main home

Mrs_WW

Hi,

My husband owns our previous home in his sole name which he purchased before we met, so it’s never been in my name.

We bought another home together which is our main residence. I’m trying to work out his CGT liability if we sell our previous home which has been let out but the tenants have now given notice.

It was his main residence for 107/192 months but I understand he can claim an additional 18 months making it 125/192 months.

It has been let for the remaining 85 months (or 67 months after taking the 18 months for PRR)

Purchase price £50,000 August 2003
Current Value £100,000
Gain of £50,000
- £3,500 fees
£46,500 profit

PRR 46,500 x 125/192 = 30,273
LR 67/192 = 0.34
0.34 x 30,273 = £10,292

30,273
- 10,292
= 19,981
- 12,000 CGT allowance
= 7,981 taxable gain at either 18% or 28% depending on income.

Is this calculation correct? Or have I gone totally wrong?

Any help would be great!
Thanks

Keep_pedalling

Looks like your final bit of the calculation has gone badly off track

It should be Profit-PPR-LR not PPR-LR

If you run the figures though HMRCs calculator you should find there is no CGT to pay.

https://www.gov.uk/tax-sell-property/work-out-your-gain

00ec25

Mrs_WW wrote: »

Hi,

My husband owns our previous home in his sole name which he purchased before we met, so it’s never been in my name.

We bought another home together which is our main residence. I’m trying to work out his CGT liability if [STRIKE]we[/STRIKE] he sells[STRIKE] our[/STRIKE] his previous home which has been let out but the tenants have now given notice.

It was his main residence for 107/192 months but I understand he can claim an additional 18 months making it 125/192 months.

It has been let for the remaining 85 months (or 67 months after taking the 18 months for PRR)

Purchase price £50,000 August 2003
Current Value £100,000
Gain of £50,000
- £3,500 fees
£46,500 profit

PRR 46,500 x 125/192 = 30,273
LR 67/192 = 0.34
0.34 x 30,273 = £10,292

30,273
- 10,292
= 19,981
- 12,000 CGT allowance
= 7,981 taxable gain at either 18% or 28% depending on income.

Is this calculation correct? Or have I gone totally wrong?

Any help would be great!
Thanks

LR is wrong

PRR 46,500 x 125/192 = 30,273
LR £46,500 x 67/192 = 16,227

taxable gain 46500-30273-16227 = £0
he has no gain on which he can be taxed

see here for fuller details of the calculation:
https://forums.moneysavingexpert.com/showpost.php?p=73621764&postcount=2

Mrs_WW

Thanks so much for this. I really appreciate it. I lived there from March 2007-July 2012 when we both moved out and the property was then rented. We got married in October 2012. Would this make a difference?

00ec25

Mrs_WW wrote: »

Thanks so much for this. I really appreciate it. I lived there from March 2007-July 2012 when we both moved out and the property was then rented. We got married in October 2012. Would this make a difference?

no change,

but I did misread your post about you living there yourself. He continued to live there as his main residence until he moved out. Your existence until that point in time is irrelevant.

You were not an owner whilst living there, and that specific circumstance cannot ever be altered after the event, even if then married. Therefore there is no point in making you a retrospective owner, since that would remove some of his PRR, and result in the calculation being messed up

leave as is - he has no tax to pay

Mrs_WW

That’s great news! Thanks for your help!

Sibbers123

Note that lettings relief is being abolished in April 2020...