Capital Gains Tax query.

Jenksy10

hi,

I bought a flat in Novemebr 1992 for £52,500 and lived in it for roughly 4 years. I then rented it out from then on until when i sold it last December (2007) for £184,950.

Can anyone help me as I am not sure how to work out the amount of Capital Gains Tax i am supposed to pay.

Thanks

CLAPTON

You need to work it out in months but this is approx how it goes

owned the property for 15 years and 1 month = 181 months
lived there for 48 months
rented it for 133 months

buy at 52,500
sell at 184,950

1. apply indexation allowance of 0.164
so adjusted buy price is 52500 x 1.164 = 61110

2. so gain is 184950-61110 = 123,840

3. deduct costs of buying and selling lets assume 2840
so gain is now 121,00

4. you get PPR relief based on the time you lived there plus 36 months

i.e. 48 + 36 = 84 month

so relief is 84/181 of the gain i.e. £56,154

5. and you're allowed letting relief ... which is this case is capped at 40,000

6. so gain is now 24845

7. you get taper relief reducing the gain to 70% i.e. 17,391

8. and your personal CGT allowance of 9,200

9 so net taxable gain is 8,191 approx

10. on this you are taxed at 10,20 or 40% depending upon your income

please check everything for yourself.

Jenksy10

Thank you Clapton so much for your help. I was expecting to pay a larger amount. :T :A