Sold house - CGT calculation

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  • Chrisl
    started a topic Sold house - CGT calculation

    Sold house - CGT calculation

    I boughts a house in April 01 for £425,000 and sold it in July 07 for £688,509.
    I did however loose my job during these times so had to move out and rent a cheaper place for myself for a while and rent out my house.
    If i moved out and rented a place myself and rented out my house, does that mean it is still classed as my PPR as i did not own any other property? I therefore dont need to worry about CGT. I assume this is not the case and that a CGT calculation still needs to be done.

    My dates are: 87months broken down as follows:
    April 01 - August 01 - Lived there - 5 months
    Sep 01 - August 03 - Rented out - 36 months
    Sep 03 - Feb 05 - Lived there - 18 months
    March 05 - July 07 - Rented out - 28 months

    Any help on a rough calcualtion would be appriciated.

  • TaxationPete
    replied
    To explain further now I have a few minures. You can not overlap Residence wilth Letting Relief Any period of residence wether actual or the 36 months exemption is deemed to be as if you are resident so ther e is no LR during the last 36 months. In your case assuming no null periods once you had started letting, you had 1552 days let however due to the last 36 months only 481 qualified for LR which maxed out at £40,000. I hope that sorts it for you. Regards Peter
    Last edited by TaxationPete; 31-01-2009, 13:05 PM. Reason: typo

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  • TaxationPete
    replied
    How many months did you actual live in the property 51 or 59. Easy. The complication comes when some moves in at the end of ownership and lives there for say 12 months to qualify the property as their PPR, they are then granted PPR but staying any longer does not change the PPR calculation as they are living in the property during the 36 months exemption. Regards Peter

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  • Chrisl
    replied
    Originally posted by TaxationPete View Post
    The expression 'last 36 months is treated' is just that, an expression. In practice your are entitled to the full 36 months. I have had the letting relief questioned when the last 38 months is treated as residential so LR would not be allowed but they accepted that it had genuinely been there home and they accepted it. In your case even if we deduct 8 months from the letting period, you have not dropped under the max £40,000 so it does not effect the tax due. Regards Peter
    I am getting it now, just!

    What i mean is that it would effect the PPR not the letting relief.

    Total gain x period of occupation/total period of ownership
    £263,509 x 59 / 74 = £210,095

    But i was just trying to get my head around why it should not be:
    £263,509 x 51 / 74 = £181,607

    I am not questioning you, it would just be nice to understand it correctly.

    The period of occupation i am getting confused about as why it should not be 51 as if you get the last 36 months automatically, this eats into the actual period of occupation of 18 months between Sep 03 - Feb 05. Therefore, as this eats into the 18 months by 8 months, it only leaves 10 left of the actual occupation.
    So 5 + 10 + 36

    Sorry if i am being stupid!

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  • TaxationPete
    replied
    I recall that old bboklet and in this case the overlap reduction does not make any difference so the OP's CGT is the same. Regards Peter

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  • King_Maker
    replied
    One of the old IR booklets used to show that "overlap" of LR and the final 36 months exemption was claimable.

    IMHO, that is wrong and HMRC have withdrawn that booklet!

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  • TaxationPete
    replied
    The expression 'last 36 months is treated' is just that, an expression. In practice your are entitled to the full 36 months. I have had the letting relief questioned when the last 38 months is treated as residential so LR would not be allowed but they accepted that it had genuinely been there home and they accepted it. In your case even if we deduct 8 months from the letting period, you have not dropped under the max £40,000 so it does not effect the tax due. Regards Peter

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  • Chrisl
    replied
    Thanks for your help and yes HRT payer.

    Sorry about the 36 months, yes it should be 23 shouldnt it.

    74 months broken down as:
    April 01 - August 01 - Lived there - 5 months
    Sep 01 - August 03 - Rented out - 23 months
    Sep 03 - Feb 05 - Lived there - 18 months
    March 05 - July 07 - Rented out - 28 months

    Just so i understand, i realise the last 36 months are exempt and you have worked out the total exempt period of 59 months (36 + 18 + 5).

    How come the 36 months can overlap the previous 18 when i lived there. E.G, i would have expected it to be 36 + 10 + 5. The 10 arising as 8 of the last months is alredy included in part of the 18 month period.

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  • TaxationPete
    replied
    There is something wrong with your months
    Sep 01 - August 03 - Rented out - 36 months is not 36 but 23
    You have hit the maximum Letting Relief of £40,000 per owner. This is available on the assumption that you declared the rental income to HMRC each year. I need your gross salary for that FY year of sale but have assumed you are a higher rate tax payer and the sole owner. :

    Capital Gains Summary

    Purchase Price £425,000 14/04/2001
    Indexation 0.000 £425,000
    Legal Fees £0
    Sale Price £688,509 14/07/2007
    Enhancements £0
    Legal Fees £0
    Gross Gain £263,509
    PPR Relief £210,095 £53,414
    Letting Relief £40,000 £13,414
    Taper Relief 20% £10,731
    CG Allow'ce 1 £9,200 £1,531
    CG Bill £612

    This tax is due to be paid by thend of January. Tomorrow.

    However if you tell me the Legal costs of acquisition and stamp duty and the sales and legal fees, these are all deductible and may wipe out the tax.
    Regards Peter

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