Capital Gains after moving back into a property

Cariad71

Hi,
We bought a house in 2001 for 84k-
we lived in it until 2012 (nearer to 12 years than 11). We then purchased our 2nd home. The first house has been rented out since then. 

It’s is now worth £300k
We’ve spent 30k on an attic conversion.
As things stand now, what would we pay in CGT (we are both paying tax at 20%) (both retired).

Also- if we sell our current home and move back into the first house for ten years- do we still pay CGT (I’m assuming we pay it on the period it was let for). Thanks 😊 

Bookworm105

better if you work it out yourself then you will understand how to do the permutations yourself
Tax when you sell your home: Private Residence Relief - GOV.UK (www.gov.uk)
the calculation should be done in months (or days) not years 

Cariad71

Bookworm105 said:

better if you work it out yourself then you will understand how to do the permutations yourself
Tax when you sell your home: Private Residence Relief - GOV.UK (www.gov.uk)
the calculation should be done in months (or days) not years 

Yes- I can play with the calculator myself but it doesn’t answer my query about moving back into a property. I’ll ask on the HMRC community forums. Thanks 

Jeremy535897

It is worth studying https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2024
You will see that, as well as actual occupation, the last 9 months of ownership are also exempt. More importantly, if you reoccupy the property as your main residence before selling it, a further three years may be exempt.
To work out your rate of tax, see:
https://www.gov.uk/capital-gains-tax/rates

Bookworm105

Cariad71 said:

Bookworm105 said:

better if you work it out yourself then you will understand how to do the permutations yourself
Tax when you sell your home: Private Residence Relief - GOV.UK (www.gov.uk)
the calculation should be done in months (or days) not years 

Yes- I can play with the calculator myself but it doesn’t answer my query about moving back into a property.

you get CGT relief for the period(s) you lived in it as your main home (plus the final 9 months of ownership if the not living there at that time, ie cannot overlap actual occupation
you do not get relief for a period when it was let 

in your case therefore 
Period let / total ownership period = X %
period main residence / total ownership period = Y % 
X + Y = 100% = total ownership period

CGT relief = gain x y%
CGT liability = gain - relief

silvercar

As has been said above, the actual calculation should be done in months or days, but as a rough estimate:

Owned for 24 years, lived in for 12, rented out for 12.

Gain = 300-84= 216, less 30 capital improvement, less buying and selling costs of say 10. So you have a gain of 176.

Exempt from CGT for 144+9=153 months out of 288.

153/288*176=93.5. So chargeable gain 288-93.5=194.5. That would be 97.25 each, less your 3k CGT allowance so 94.25. Charged at marginal rates, so some would fall into higher rate bracket.

If you move back in for 10 years, obviously the ratio of let out to owner occupied moves in your favour, but who knows what the CGT rules will be in 10 years time? Or how much the property will be worth?

Cariad71

silvercar said:

As has been said above, the actual calculation should be done in months or days, but as a rough estimate:

Owned for 24 years, lived in for 12, rented out for 12.

Gain = 300-84= 216, less 30 capital improvement, less buying and selling costs of say 10. So you have a gain of 176.

Exempt from CGT for 144+9=153 months out of 288.

153/288*176=93.5. So chargeable gain 288-93.5=194.5. That would be 97.25 each, less your 3k CGT allowance so 94.25. Charged at marginal rates, so some would fall into higher rate bracket.

If you move back in for 10 years, obviously the ratio of let out to owner occupied moves in your favour, but who knows what the CGT rules will be in 10 years time? Or how much the property will be worth?

Wow- thank you for taking the time to do this for me. It’s much appreciated! 

Cariad71

Thank you both! 

Cariad71

silvercar said:

As has been said above, the actual calculation should be done in months or days, but as a rough estimate:

Owned for 24 years, lived in for 12, rented out for 12.

Gain = 300-84= 216, less 30 capital improvement, less buying and selling costs of say 10. So you have a gain of 176.

Exempt from CGT for 144+9=153 months out of 288.

153/288*176=93.5. So chargeable gain 288-93.5=194.5. That would be 97.25 each, less your 3k CGT allowance so 94.25. Charged at marginal rates, so some would fall into higher rate bracket.

If you move back in for 10 years, obviously the ratio of let out to owner occupied moves in your favour, but who knows what the CGT rules will be in 10 years time? Or how much the property will be worth?

Me again. I’ve been spending some time doing these calculations.
 Can you take a look at what you have put as my chargeable gain (288k). This is more than my actual gain of 176k.

Am I right I’m saying that my chargeable gain is actually 176-93.5= 82.50k. So that is 41.25 each less 3k rack. £38.24k each. Can anyone confirm my calculations please. Am I paying CGT on £38.24k? Thanks 

silvercar

Cariad71 said:

silvercar said:

As has been said above, the actual calculation should be done in months or days, but as a rough estimate:

Owned for 24 years, lived in for 12, rented out for 12.

Gain = 300-84= 216, less 30 capital improvement, less buying and selling costs of say 10. So you have a gain of 176.

Exempt from CGT for 144+9=153 months out of 288.

153/288*176=93.5. So chargeable gain 288-93.5=194.5. That would be 97.25 each, less your 3k CGT allowance so 94.25. Charged at marginal rates, so some would fall into higher rate bracket.

If you move back in for 10 years, obviously the ratio of let out to owner occupied moves in your favour, but who knows what the CGT rules will be in 10 years time? Or how much the property will be worth?

Me again. I’ve been spending some time doing these calculations.
 Can you take a look at what you have put as my chargeable gain (288k). This is more than my actual gain of 176k.

Am I right I’m saying that my chargeable gain is actually 176-93.5= 82.50k. So that is 41.25 each less 3k rack. £38.24k each. Can anyone confirm my calculations please. Am I paying CGT on £38.24k? Thanks 

Yes, you are right. I picked the number from the wrong line.

Cariad71

Phew! Thanks.