Will I have to pay cgt on my property which I have both lived in and rented out?

[itwasnevermine]

I've accepted an offer on my residential property. I bought it at the start of 2002 when I lived in it for 6 months. I rented it out until mid 2006 when I lived in it again for a year before renting. I then moved back in start of 2011. Will I have to pay capital gains tax?

I have one more question. I have found loads of basic calculators on line but none allow me to input dates of living in what has essentially been a rental property. Can anyone forward me a link to a more sophisticated calculator?

[TaxationPete]

You need to provide actual dates and values, your costs of acquistion and an estimate of the sales and legal fees and you estimated gross Income this FY. It sounds if that it will qualify are your PPR and the last 36 months will be exempt, read HS283 on the HMRC web site and you will be entitled to claim Letting Relief of up to £40,000 to further offset and CG liability. Regards Peter

[itwasnevermine]

Purchased March 2002 for £325,000
Selling January 2012 for 650,000
Residential first six months of 2002
Residential June 2006 to July 2007
Residential Feb 2011 to current
All other times rented
Stamp duty on purchase (not sure but what ever percentage was at the time)
Legal fees on purchase £500
Legal fees on sale £800
Agency fee on sale 2.5% plus vat
Income 70k
Lease extension 40k (paid out whilst residential)

[TaxationPete]

I have assumed you lived there as you only private residence from March to Sept. The lease cost is allowable and the numbers look like this :
Purchase 325000 14/03/2002
Disposal 650,000 14/01/2012
Total Gain 264,200
PRR 143,295 64 118
Capital Gain 120,905
Lett Relief 40,000 Qual Days 1310
Net Gain 80,905
CG Allow 10,600
CGT 18% 0 0
CGT 28% 19,685 19,685

CGT Bill 19,685

Are you married and have you signed the exchange contract yet. Regards Peter

[itwasnevermine]

Yes, it is my only private residence

I'm single and I haven't signed exchange yet.

Also, I purchased a lease extension on another rental property for £30,000 for the tax year of 2010 to 2011. Can I use this to bring down my liability?

[Telometer]

Where did you live when you were not living here, and why?

[itwasnevermine]

When not living in the flat which I'm due to sell, I was living in the other property on which this year I obtained a lease extension for 30k. I moved because I was bored living in the other place.

[TaxationPete]

I think a lease extension can only be claimed against the disposal of the property that related to the lease. Regards Peter

[itwasnevermine]

One of the two lease extensions was on the property which I'm currently selling but I purchased the extension during the brief time I lived there. Can this extension still be claimed against the disposal of the property? If not, what would be final cgt bill?

[TaxationPete]

The figure I gave you includes the £40,000 lease extension. Regards Peter

[itwasnevermine]

I've been advised by another source that I can't offset the cost of the lease extension on the other rented flat on my tax return for this year. I can only claim against the disposal of the property once I sell it. This leaves me with a hefty tax bill when I sell my residential property. If I have my other flat completely refurbished, can I offset this amount against my tax return or must I still wait until I sell the flat. I suppose this question is whether the amount is a capital expense or maintenance expense?

[TaxationPete]

As I said a Lease Extension is only deductible from the disposal of the property the lease refers to. A refurb would be a revenue issue so would change your capital position. A 20K CGT bill is not a lot compared to the £325 K gain you have made and a rental income over the rented periods. Regards Peter