Capital Gains Tax

Bookworm105

lobster1239 said:

Hi, bookworm105.  That’s precisely what I meant.  There’s only 2 houses as you describe much better than me.  I really hope my house sells within 9 months but out of curiosity, do you know what the percentage of CGT would be if it takes longer. Many thanks 

PRR works on the proportion of time (normally measured in months, but technically can be in days, but never years) that you lived in it as your main home plus the final 9 months (if not still living in it)

that gives a % of your total ownership which is exempt from CGT, so it is impossible to answer your question since the exempt % varies with every day/month until you sell it 

as others have shown, owned for a long time then the non exempt % is tiny/small and still has the 3,000 allowance anyway 

as a vague example, "old home" gross gain 125,000 - 25,000 (original purchase price) = £100,000
(your statement that you increased the mortgage to 32,000 to fund repairs is irrelevant as I very much doubt the extra money was spent on qualifying capital improvements given you use the word "repairs")

scenario 1: purchased Mar 1995, sold Feb 25 = owned 360 months (30 years) lived in until sale so 360/360 = 100% exempt

scenario 2: purchased Mar 1995, lived in until Feb 25 (360 months) then sold Nov 25 (ie, 9 months after moving out) = owned 369 months, so (360+9)/369 = 100% exempt

scenario 3: purchased Mar 1995, lived in until Feb 25 (360 months) then sold Jan 26 (ie, 11 months after moving out) = owned 371 months, so (360+9)/371 = 99.5% exempt and 0.5% liable.
CGT liability £100,000 x 0.5% = 5,000 - 3,000 CGT allowance = 2,000 taxable gain which will be taxed at either 18% and/or 24% depending on how much of your basic rate tax band remains unused .
Worst case, all 24% x 2,000 = £480 tax to pay from the £125,000 sale proceeds

don't get hung up on the amount of tax, with 30+ years of ownership it will take many more years before the amount of tax payable would be impactful on the amount of money left from the sale. The maths for other scenarios is as simple as shown 

DRS1

CGT liability £100,000 x 0.5% = 5,000 - 3,000 CGT allowance = 2,000 taxable gain

I make it £500 not £5000 but it is late.

Bookworm105

DRS1 said:

CGT liability £100,000 x 0.5% = 5,000 - 3,000 CGT allowance = 2,000 taxable gain

I make it £500 not £5000 but it is late.

correct, it was a test of whether people can follow simple maths