CGT if I lived in a house before letting it.

thenap80

I did try to fathom the answer from .gov website but couldn't. And this site is usually uber reliable! '..

My tenant who has lived in my only property for last five years has indicated she would like to buy it. I am considering it but when it comes to CGT, do I get some relief for the ten years I lived in the house. I now rent somewhere else with my wife so I don't actually have another property.  The property in in my name only.

Regards
Barry

Ditzy_Mitzy

You'll be entitled to some CGT relief, as I understand it, but not the whole lot.  It's one of those cases where speaking to the revenue directly is likely to be most helpful as all the calculations are based on individual circumstances.

MX5huggy

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

Slithery

You get relief for the time you lived in the house plus the last 9 months (even if it is let during this time).

In your case you will have owned the property for 180 months and let it out for 60 so you are liable for tax on 51/180 of the profit minus your yearly allowance (currently £12300).

thenap80

If right, so not as bad as I thought. I thought, of my say £160,000 profit, I'd be paying CGT (minus nine months as I could fathom). But to know I'll only pay a portion based on time it was let out is much much better. ThAnks kindly for reassuring me and taking time to respond people.

Barry:)

saajan_12

thenap80 said:

If right, so not as bad as I thought. I thought, of my say £160,000 profit, I'd be paying CGT (minus nine months as I could fathom). But to know I'll only pay a portion based on time it was let out is much much better. ThAnks kindly for reassuring me and taking time to respond people.

Barry:)

To be pedantic, you get relief for the time you lived there as your main residence (plus the last 9 months) as opposed to paying for the time rented. Difference is just if there was a gap between living there and renting when it was empty / refurbished etc, you wouldn't get relief for that time. 

thenap80

Thanks, and I just read you get a tax free allowance on CGT. So the way I see it now, my gains taxin won't actualy be alot, even though my profit on house would be about 160k. What with living in it for ten of the fifteen years I've owned it, and having the tax free allowance! Not bad considering i initially thought I'd be owing about £30/40k tax.

Slithery

If you're a higher rate taxpayer it would be £160k x 51/180 - £12300 x 0.4 = £13213

Obviously this is based on the rough information you've given us, you'll need the exact dates and profit to do an exact calculation.

thenap80

...if I am basic rate tax payer? Is it a different allowance, or just use 0.2 instead of 0.4? 

Slithery

The allowance will be the same, yes.

However, unless you earn less then £4500 a year this disposal will take you into the higher tax bracket (>£37500). Normal tax rules apply, you pay 0% on the first £12570, 20% on everything between £12570-£37500 and 40% on everything above that.