Reliefs available to minimise CGT bill upon Sale of property

Habib2342

Evening all,

So as title suggest, I am contemplating selling my flat and recognise there will be a CGT liability due upon sale completion. No issue with that, i'd rather not pay it, but the law is the law. I understand from research I can claim PRR and not lettings relief as I had let the flat fully for 58/192 months I've owned teh property. Lettings Relief isn't applicable as I ddin't co-habit the proeprty with the tenant. Are there any other releifs I can claim to minimise my tax bill ?

CGT allowance for 2023-24 tax year is £6k, but that is going to be reduced in the coming years from what I've read.so need to make a decision whether to sell before end of tax year or not.

thanks,

purdyoaten2

Letting relief is not applicable as it was abolished from April 2020. You can only claim PPR if you actually lived in the flat at some point. If you did live in it for the other 134 months 143/182 of the gain would qualify for PPR. 

The gain is calculated - Sale Proceeds less purchase cost less legal fees associated with buying and selling less improvement costs. 

lisyloo

Do you have any ability to reduce your income?
I mean could you use your personal allowance and/or basic rate tax band?
e.g. One scenario is doing this when retiring and living off savings so zero income or indeed taking a gap year at any age.
Are you married? 

Sounds somewhat drastic to tailor your life around the sale, but could you time the sale around your life?

If it's not worth it then you just have to accept the tax I'm afraid but having a gain is not the worst problem to have.

Jeremy535897

lisyloo said:

Do you have any ability to reduce your income?
I mean could you use your personal allowance and/or basic rate tax band?
e.g. One scenario is doing this when retiring and living off savings so zero income or indeed taking a gap year at any age.
Are you married? 

Sounds somewhat drastic to tailor your life around the sale, but could you time the sale around your life?

If it's not worth it then you just have to accept the tax I'm afraid but having a gain is not the worst problem to have.

You can never use personal allowances against capital gains, even if you have no income at all.

Habib2342

thanks all, I worked out the tax payable amount using the formula  at https://www.which.co.uk/money/tax/capital-gains-tax/capital-gains-tax-on-property-aUvSS1P7cdEV but purdyoaten2 is quoting a different formula. Which formula will HMRC use to work out the tax payable ?

Also anyone aware of HMRC's position to restrict PRR if you'r working from home and wanting to sell your property while wfh. .  According to the article at https://www.mytipsandadvice.co.uk/2020-10/has-working-from-home-landed-you-with-a-cgt-bill-UKTATXAR_EU21020601, its unlikely.... 


thanks,

Habib. 

purdyoaten2

Habib2342 said:

thanks all, I worked out the tax payable amount using the formula  at https://www.which.co.uk/money/tax/capital-gains-tax/capital-gains-tax-on-property-aUvSS1P7cdEV but purdyoaten2 is quoting a different formula. Which formula will HMRC use to work out the tax payable ?

Also anyone aware of HMRC's position to restrict PRR if you'r working from home and wanting to sell your property while wfh. .  According to the article at https://www.mytipsandadvice.co.uk/2020-10/has-working-from-home-landed-you-with-a-cgt-bill-UKTATXAR_EU21020601, its unlikely.... 


thanks,

Habib. 

As previously stated - no Lettings relief available as you did not share property with tenant. What differences in the formula do you note?

The PRR example for ‘John’ is as I have described. 

Jeremy535897

A room would have to be used exclusively for business to impact main residence relief.