Is allowance applied before CGT is calculated?

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    Is allowance applied before CGT is calculated?

    Hi, can someone tell me if...

    on a gain of say £90000 with 2 people(19200)allowance
    is 18% taken off first to give a gain of £16200
    and then your allowance of £19200 giving no tax to pay
    £90000-£19200 allowance=70800 and then 18% to give £12744 tax to pay


    Steady. The CG allowance is £9,600 each (£9,200 last year) It is the gain minus acquisition, sales and legal costs, minus allowance and then tax at 18%. If the exchange of contract was dated last your then it is quite different. Was this a rental property that you once live in. Tell me more. Regards Peter
    Last edited by TaxationPete; 19-08-2008, 14:28 PM. Reason: Typo


      Just spoke to my accountant and she said no cgt was due.
      my example:
      bought property in 1991....55000
      lived in it as main residence till 2003....
      rented out from 2003-jan 2008
      sell hopefully?...this year for 170000 after accepting offer
      so lived in for 12yrs+3yrs extra allowance I was told =15yrs out of 17yrs ownership as main residence.
      + less than 40k rent allowed rule etc.
      The main point here is that the Gov has taken away everything regarding old cgt rules but the main residence rules which they couldn't....well, not yet anyway......thankfully in my case


        Your assumptions are not quite correct, other then there is no CGT due. Based on mid date, mid year and you figure then here is it :

        Capital Gains Summary

        Purchase Price £55,000 14/06/1991
        Indexation 0.000 £55,000
        Legal Fees £0
        Sale Price £170,000 14/10/2008
        Enhancements £0
        Legal Fees £0
        Gross Gain £115,000
        PPR Relief £99,519 £15,481
        Letting Relief £30,993 -£15,512
        Taper Relief 0% -£15,512
        CG Allow'ce 2 £9,600 -£34,712
        CG Bill £0

        '-' numbers indicates unused relief's or allowances.

        I read between the lines thus my question regarding whether you lives there, I assume you both lived there. ? Regards Peter


          I also assume you have declare the rental income to HMRC. No declaration , no letting relief. Regards Peterd


            Hi Pete, thanks for your response..............
            Yes we both lived in it, and yes all rental income was declared, at the end of the day there's no CGT due.......all I got to do is sell it now.


              You should note that you have circa £34,000 of unused reliefs or allowance if you want to keep it rentad out a while. Regards Peter


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