Capital Gains Tax and Allowances

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  • Capital Gains Tax and Allowances

    I have been reading about relief on CGT but am still confused.

    I acquired sole ownership of a house in 2000 through a divorce settlement and continued to live in the house until 2006 when I bought another property and let out the first one. I sold the first house in June 2011 and would like to know what relief I can claim on the profit. I have read about the 36 month rule, partial residence relief and private letting relief but do not know which or any of them apply to me.

    Also how do you find out the market value of the house and does this start from when the property no longer became my main residence or from the time of acquisition?

    Any advice would be much appreciated.

    Thanks, Mary

  • #2
    I suspect you will not be liable to CGT due to you PPR and LR Read HS283 on the HMRC web site. I would need all the dates and values to check this for you. I need the vlaue when it was placed in your name and date, the vlaue when sold and the date of the first and last let days. Regards Peter

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    • #3
      Thanks for the reply. The house was transferred to me in Oct 2000 and the approximate market value was £230,000. The house was sold on June 30 2011 for £345.000. The property was let from 1 March 2006 till 30 June 2011.
      Thanks, Mary

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      • #4
        As I thought No CGT. I have had to make assumption about when you moved in and when you left but the figures look like this :
        Purchase 230000 14/10/2000
        Disposal 345,000 14/06/2011
        Total Gain 115,000
        PRR 90,551 100 127
        Capital Gain 24,449
        Lett Relief 24,749 Qual Days 838
        Net Gain -301
        CG Allow 10,600
        CGT 18% 0 0
        CGT 28% 0 0

        CGT Bill 0

        So even before Costs and sales and legal fees there is no gainbut you should still report the sale to HMRC. Regards Peter

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        • #5
          Thanks Pete this is good news but can you please explain your calculations a bit. These are the bits I don't quite understand.

          PRR 90,551 100 127

          Lett Relief 24,749 Qual Days 838

          Many thanks again
          Mary

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          • #6
            When did you separate, and when was the house transferred, and did it belong to you 50% beforehand, and did you live there beforehand, and who was living there when it was transferred?

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            • #7
              We did not separate until the divorce and the transfer of the house which was October 2000. The house was in my ex husbands sole name and we were both living there with the children. When the court ordered that the house be transferred to my sole name and that my ex husband should move out, I continued to live there with the children. This all happened in the year 2000.

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              • #8
                You should read this page and the following pages http://www.hmrc.gov.uk/manuals/cgmanual/cg22400.htm in order to confirm to yourself the correct order of events and that Pete's analysis above is correct.

                http://www.hmrc.gov.uk/manuals/cgmanual/cg22505.htm

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                • #9
                  Here are some slightly revised figures :
                  Purchase 230000 14/10/2000
                  Disposal 345,000 30/06/2011
                  Total Gain 115,000
                  PRR 89,844 100 128
                  Capital Gain 25,156
                  Lett Relief 25,030 Qual Days 851
                  Net Gain 126
                  CG Allow 10,600
                  CGT 18% 0 0
                  CGT 28% 0 0

                  CGT Bill 0

                  When posting the spaces can be lost. Your PRR relief is the gain times the 100/128 This is the actual period of residence plus 36 months, over the actual period of ownership resulting in a gain of £25,156
                  Letting relief wipes this gain out. The qualifying days are those that were actually let but not including the last 36 months.
                  Any slight error in the calculations are cuased by using whole months for PPR and whole days for LR. Whole days can be used for both if it benefits the seller. Regards Peter

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