Capital gains on selling House pre/post April 2020

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    Capital gains on selling House pre/post April 2020

    Hi

    I have a house which is currently rented and I am considering selling it.I just did some calculations and it seems the changes to the lettings relief will sting me but I want to make sure I have got my calculations correct. Details are:

    I brought the house for £33.360 on the 25th may 2001 left the house November 2014 and rented it from December 2014 till present day I could sell for £190.000

    But i spent £13000 on home improvements
    And sales fees of £1800
    So a Taxable profit of £141.840
    I have lived in the house for 161 months plus with current tax laws im allowed 18 months on top of that so its 179 out of the 222 months i have owned the house .
    If my calculations are right i should be entitled to 80.630 % of PPR so £114.365
    So now i am left with £27475
    I think so far i am correct
    Now the next bit im not sure on is it £40.000 Letting relief or a percentage of the £27475 i have left to take into account
    If it is £40000 then the bill is zero
    So if anyone can throw some light on the Letting relief i would be grateful
    Also the tax change states that you have to sell the house by April 6th 2020. So for example if i agreed to sell lets say start of December but there was a hold up on paper work by solicitors and it went past the April 6th deadline , would i be liable to the new tax laws or would i be ok as the process was started in December

    #2
    The letting relief is capped at the gain, not £40k, but your calculation is basically correct despite that.
    The tax event is completion, not agreeing the sale.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      You have to exchange contracts before 5 April 2020 to claim £40K lettings relief .

      https://alexander.co.uk/news/letting...your-own-home/

      After 6 April 2020, the 18 months period is reduced to 9 months and lettings relief can only be claimed by landlord sharing the home with a lodger/tenant.

      Comment


        #4
        Originally posted by Gordon999 View Post
        You have to exchange contracts before 5 April 2020 to claim £40K lettings relief .

        https://alexander.co.uk/news/letting...your-own-home/

        After 6 April 2020, the 18 months period is reduced to 9 months and lettings relief can only be claimed by landlord sharing the home with a lodger/tenant.
        Well thats handy to know that its at exchange of contracts and not completion as it might buy me a bit more time.
        Thanks for the info

        Comment


          #5
          Originally posted by jpkeates View Post
          The letting relief is capped at the gain, not £40k, but your calculation is basically correct despite that.
          The tax event is completion, not agreeing the sale.
          So if for arguments sake i had £39000 left after taking away expenses and PPR i would still pay zero as im still under the £40000 limit , am i reading this right .

          Comment


            #6
            Letting Relief is capped at the lowest of:

            £40,000
            The taxable gain or
            The amount of PRR

            So in the example in your first post the PRR is £114 and change, the taxable gain is £27475 and £40k is £40k.
            So the lowest of those is £27475 and so you'd owe nothing.

            If what was left was £39k it would obviously depend on the other figures, but if they were otherwise the same as your first example, yes.

            Don't forget you have £12k of tax free allowance to play with as well.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

            Comment


              #7
              Thanks jpkeates

              Comment

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