Letting relief

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    Letting relief

    Hi,
    if i had a house which i had owned for 28 years, the first 3 i had lived in as my permanent residence and had a gain of £100K upon sale please consider the following

    A)
    gain 100
    - letting relief 40
    = Chargabele gain 60
    - less taper relief 24
    - less pers. allwnc 9
    =chargable gain 25
    CGT Payable 40% 10

    B gain 100
    prr 10
    letting relief 10
    gain 80
    taper relief 32
    pers all 9
    charg gain 39
    cgt 40% 15.6


    option a looks favourable as i understand you can only claim the lower of Prr already calculated as letting releif if you dont claim any prr can you claim the full 40K letting relief??

    also if you can do this if a had a valuation at the point of letting, ie 3 years into owenrship, could i take the value from their to calculate the gain and ingnore prr totally and us the full £40K letting relief.

    your thoughts are much appreciated
    Thanks
    STEVE
    Last edited by stephenp; 30-11-2006, 16:02 PM. Reason: formatting didnt work
    Many Thanks
    Steve P

    #2
    Originally posted by stephenp View Post
    Hi,
    if i had a house which i had owned for 28 years, the first 3 i had lived in as my permanent residence and had a gain of £100K upon sale please consider the following

    Let's not get carried away with hypotheticals and long winded queries.

    A)
    gain 100
    - letting relief 40
    = Chargabele gain 60
    - less taper relief 24
    - less pers. allwnc 9
    =chargable gain 25
    CGT Payable 40% 10

    Letting relief will be nil if PPR relief is nil.

    B gain 100
    prr 10
    letting relief 10
    gain 80
    taper relief 32
    pers all 9
    charg gain 39
    cgt 40% 15.6

    On a house which is owned for 28 years, the first 3 lived in, PPR would be 6/28 x £100K = £21K and therefore letting relief will also be £21K.

    option a looks favourable as i understand you can only claim the lower of Prr already calculated as letting releif if you dont claim any prr can you claim the full 40K letting relief??

    Don't let your imagination run wild.

    also if you can do this if a had a valuation at the point of letting, ie 3 years into owenrship, could i take the value from their to calculate the gain and ingnore prr totally and us the full £40K letting relief.

    All gains are spread evenly over the whole period of ownership and there is no scope for inserting any in-between valuations.

    your thoughts are much appreciated

    But don't count on it if you persist with figments of your imagination.

    Thanks
    STEVE
    See comments above in red.
    Ramnik
    Private advice is available for a fee by sending a private message.

    Comment


      #3
      Sorry, i just thought giving you more info would make it easier to anwser for yourself.

      Why is PRR 6/28th if the house was only lived in for 3 years????????

      Thanks
      Many Thanks
      Steve P

      Comment


        #4
        Originally posted by stephenp View Post
        Sorry, i just thought giving you more info would make it easier to anwser for yourself.

        What you were giving was not more information but running wild scenarios.

        Why is PRR 6/28th if the house was only lived in for 3 years????????

        Quote from my reply to your earlier posting yesterday:

        ''If you live in it for 3 years (all exempt) and then let it for 10 years (final 3 years exempt due to using it as your residence earlier) , you will have a total of 6 years exempt out of total ownership period of 13 years.''

        Did you not read this, and if not, why not? After all, this was in reply to your own posting.


        Thanks
        Stephen P,

        Yesterday you asked a question:
        ''what is the £40K letting relief and when does this apply?''

        Within a few hours, and waiting for a reply, you started running a second thread headed ''Letting Relief''.

        Why are you running multiple threads relating to the same issue?

        Ramnik
        Private advice is available for a fee by sending a private message.

        Comment


          #5
          yes i did read it but was confused as to why you recieve 6years exempt if you only live in it for 3 years, does this mean that if you lived in it for 1 year you would get 4 years PRR?????
          Many Thanks
          Steve P

          Comment


            #6
            Also is letting releif only available if you have lived in the property

            Thanks
            Many Thanks
            Steve P

            Comment


              #7
              Originally posted by stephenp View Post
              yes i did read it but was confused as to why you recieve 6years exempt if you only live in it for 3 years, does this mean that if you lived in it for 1 year you would get 4 years PRR?????
              YES. If a property has been your ''only or main residence at any time in your ownership'', the final 3 years of ownership are automatically exempted. This is meant to allow you time to sell it in a difficult market but you could do whatever you like in these final 3 years, including letting, and still have the final 3 years exempted.

              Ramnik
              Private advice is available for a fee by sending a private message.

              Comment


                #8
                Originally posted by stephenp View Post
                Also is letting releif only available if you have lived in the property

                Thanks
                YES.

                QUOTE FROM PREVIOUS REPLY:

                Letting Relief is given to reduce chargeable gains arising on the disposal of any property which has been:

                'occupied as only or main residence' at anytime during the ownership
                AND ALSO
                'let as residential accommodation' at anytime during the ownership.


                Both conditions must be satisfied.

                Ramnik
                Private advice is available for a fee by sending a private message.

                Comment

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