CGT on sale of rented house, formerly main residence

[cloo]

Just seeking some confirmation on some things I'm not certain about.

I bought my old house in 2001, rented it out since 2005, since my beloved didn't want to live in that part of town and we have bought our own place together elsewhere. We're hoping to have another baby in the next year or two, and will then have to think about selling up both and moving to a house. There is no mortgage outstanding on the rented property.

I gather that, seeing as it was my principal residence, the CGT will only be calculated from the gain in value since the time I left it (which I estimate at 200k) and not its value at the time of purchase. Is this correct? This is important, as its value increased quite significantly in those first years I lived there, but with the housing market fall, there's not such a massive gap in the time since I've rented it.

Also, and I'm less sure I've understood this correctly, am I right in thinking that there is 40k of relief on the CGT if it has, at some point, been my principal residence? Or is it more complicated than that?

[Telometer]

1. "beloved" = wife or unmarried partner?
2. Does she own a share in the old house? If so, since when? And did she ever live there (if so, when).
3. Cost of old house when purchased, fees on purchase, cost of any capital improvements (extensions, new roof, new windows/kitchen/bathroom shortly after moving in or where there is considerable improvement.
4. Value at time of moving out.
5. Value now.
6. Month of acquisition, moving out.
7. Months in which the house has been let.

[cloo]

1. "beloved" = wife or unmarried partner?
Husband now

2. Does she own a share in the old house? If so, since when? And did she ever live there (if so, when).
His name is not on the deeds and he never lived there

3. Cost of old house when purchased, fees on purchase, cost of any capital improvements (extensions, new roof, new windows/kitchen/bathroom shortly after moving in or where there is considerable improvement.

Purchased for 133.5k fees, hmm, 2-3k?, new kitchen 3.5k, 500 extension roof replacement, £800 new boiler, £700 new built in cupboards. All other works were pretty cosmetic and minor
4. Value at time of moving out.
£200k

5. Value now.
Hard to say – similar are being put on the market at an average of about £220k right now

6. Month of acquisition, moving out.
Acquired November 2001 – Moved our 1 December, 2005

7. Months in which the house has been let.
It has been let continuously since I left.

[Telometer]

Apologies for your sex change!

Value now 220k. Cost, let's say 135k. Gain 85.

Assume sold last month, so 9 years after purchasing, of which you'd lived there 4 years.

Tax free period = 4 years lived there, plus last 3 years (kind gift from taxman) = 7/9. So 85k * 7/9 = 66k.

Plus up to a further 40k tax free "lettings relief" available, restricted to 2/9ths (the part that's not the 7/9ths above).

So no tax to pay.


By the way:

I gather that, seeing as it was my principal residence, the CGT will only be calculated from the gain in value since the time I left it (which I estimate at 200k) and not its value at the time of purchase. Is this correct?

It's not generally viewed as being the normal way to calculate it, but in your case it doesn't matter.

[cloo]

Thanks, that's what I'd hoped... with the 40k, plus the market fall, I reckoned I'd have nothing or little to pay on it.

[cloo]

Bumping this up again, as this is looking closer to reality now and I wanted also to check whether not paying CGT was dependent on me being resident, or appearing to be resident, when the sale completes?

It just occurred to me that maybe all the advice I've been given, which suggests I'm not liable for CGT, might have been made on the assumption that I know to do something that I don't know about, if you see what I mean!

[King_Maker]

No - as it has already been your PPR, the last 3 years of OWNERSHIP are always treated as exempt.

Have you read HMRC's Help Sheet HS283 on the subject?

[cloo]

No, but thanks, will look that up.