Capital gains tax, private residence relief on sale of rented property that has been main residence

2poor4this

I'm trying to work out my capital gains tax liability on the recent sale of my second property, the information I have found is contradictory, it's possible the rules changed in 2020?

My question is, am I able to claim private residence relief, or some version of it on the sale of my second property which I've owned for 21 years, bought in 2003, it was my main residence for the first 7 years and has been a rental property for 14 years ( I have not lived in the property for the last 14 years, it has not been my main residence in that time)

I've phoned HMRC for advice to be told self assessment didn't deal with this and they have put a request in for a call back next week, even though I called the number for the capital gains tax department.

Can anyone shed any light on this for me?

Jeremy535897

The rules changed from 6 April 2020. Lettings relief is no longer available where the whole house is let out. Roughly speaking, a little over a third of the gain on the property will be exempt (period occupied as main residence plus last 9 months of ownership). The most straightforward guidance is here:
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2024
The rules on filing the online return and paying CGT within 60 days of completion are here:
https://www.gov.uk/report-and-pay-your-capital-gains-tax

p00hsticks

There's a calculator here
Tax when you sell property: Work out your gain - GOV.UK (www.gov.uk)

2poor4this

Jeremy535897 said:

The rules changed from 6 April 2020. Lettings relief is no longer available where the whole house is let out. Roughly speaking, a little over a third of the gain on the property will be exempt (period occupied as main residence plus last 9 months of ownership).

Thank you for that

So if I understand correctly if I purchased the property in late February 2003 and used it as my main residence until July 2010 that would be 89 months I can then add another 9 months to that for the last period of ownership, giving a total of 98 months. (Do they class part months as a whole or do they not count at all?)

I've owned the property for 258 months (20th February 2003 to 30th August 2024) 

So the percentage of relief would be 37.98%

So if we use a nice round figure of £100,000 gain I can use £37980 as the figure to enter into the capital gains tax calculation for private residence relief?

Does that sound about right?

2poor4this

p00hsticks said:

There's a calculator here
Tax when you sell property: Work out your gain - GOV.UK (www.gov.uk)

Thank you for that, I've used that form but I need to add any private residence relief to it for a proper calculation, it's that bit I'm struggling to understand.

Bookworm105

2poor4this said:

Jeremy535897 said:

The rules changed from 6 April 2020. Lettings relief is no longer available where the whole house is let out. Roughly speaking, a little over a third of the gain on the property will be exempt (period occupied as main residence plus last 9 months of ownership).

Thank you for that

So if I understand correctly if I purchased the property in late February 2003 and used it as my main residence until July 2010 that would be 89 months I can then add another 9 months to that for the last period of ownership, giving a total of 98 months. (Do they class part months as a whole or do they not count at all?)

I've owned the property for 258 months (20th February 2003 to 30th August 2024) 

So the percentage of relief would be 37.98%

So if we use a nice round figure of £100,000 gain I can use £37980 as the figure to enter into the capital gains tax calculation for private residence relief?

Does that sound about right?

yes, 98/258 of your ownership gets PRR
so your taxable gain will be 62,020 on which you will pay CGT at the rate of either 18% and / or 24% depending on the value of your total "income" including that taxable gain value for the tax year. Obviously the gain needs to be split by owner, if applic, so each owner's personal financial circumstances impact the CGT rate each person will pay  

(technically the calculation can be done in days, but rounded months is certainly accepted as the impact on the amount of tax payable when working to several decimal places is negligible)

2poor4this

Bookworm105 said:

2poor4this said:

Jeremy535897 said:

The rules changed from 6 April 2020. Lettings relief is no longer available where the whole house is let out. Roughly speaking, a little over a third of the gain on the property will be exempt (period occupied as main residence plus last 9 months of ownership).

Thank you for that

So if I understand correctly if I purchased the property in late February 2003 and used it as my main residence until July 2010 that would be 89 months I can then add another 9 months to that for the last period of ownership, giving a total of 98 months. (Do they class part months as a whole or do they not count at all?)

I've owned the property for 258 months (20th February 2003 to 30th August 2024) 

So the percentage of relief would be 37.98%

So if we use a nice round figure of £100,000 gain I can use £37980 as the figure to enter into the capital gains tax calculation for private residence relief?

Does that sound about right?

yes, 98/258 of your ownership gets PRR
so your taxable gain will be 62,020 on which you will pay CGT at the rate of either 18% and / or 24% depending on the value of your total "income" including that taxable gain value for the tax year. Obviously the gain needs to be split by owner, if applic, so each owner's personal financial circumstances impact the CGT rate each person will pay  

(technically the calculation can be done in days, but rounded months is certainly accepted as the impact on the amount of tax payable when working to several decimal places is negligible)

Fantastic ,Thank you for confirming that for me, I can look at calculating it in days and months will the real figures and see what the difference is.

Thanks must go to Jeremy535897 and p00hsticks as well for taking the time to help me with this, it's all been very much appreciated.