CGT where home has become BTL

  • Filter
  • Time
  • Show
Clear All
new posts

    CGT where home has become BTL

    As a newcomer to BTL, I am really struggling to understand the capital gains tax issues around my BTL property.

    I have lived in property A for 4 years as my home and only property. It has increased in value from the purchase price of £700k to an estimated £1000k at today’s value. I am now buying Property B and will live there as my main home and intend to let out Property A and possibly sell it in the future.

    I am concerned about my exposure to CGT when I sell property A in (for example) 5 years. Let’s say it’s worth £1200k in 5 years time. What sum will I be assessed for capital gains tax? The guidance that I have read on HMRC and other websites has confused me. When I sell will I be liable for CGT on the entire £500k increase in value or just the increase in value for the period I have rented it out ? How is the interim value point assessed. What evidence will i need to produce for any relief?


    It will depend on what CGT rules there are then: Any old looney swivel-eyed fruitcakes could be in charge passing g*wd knows what legislation in 5 years time... Or the EU bring in legislation changing CGT across Europe...

    I would ensure I had property valuations from say local estate agents etc (in writing) and lots of documentary evidence about you having lived there (eg utility bills, etc etc..)

    Why not 'phone those nice HMRC chaps & ask their advice??
    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...


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


        Thanks for this – I understand that “private residence relief” means the portion you are NOT charged CGT on. So in my little example I would get 4 years relief for the period I actually lived there plus a further 3 years (36 months) for the final 3 years. So 9 years of ownership and £500k profit would result in me being liable for CGT at 2/9 of the total which would be £111. Then less there is my 10k CGT allowance for the year (providing that does not change). So I would be asked to pay CGT on £101 at 28% (higher tax rate) so in this case £28k.

        Sorry to drag everyone into my arithmetic but if anyone could face checking this example then it would give me great comfort. I am not expecting a cast iron guarantee and I realise that the rules will be different in a few years but am I barking up the right tree based on todays rules?


          The legislation changed on the 6th of April and you now only get 18 months extension not 36.. You would however get letting relief for each qualifying ownerof up to £40,000.
          It looks like this :
          Purchase 700,000 14/05/2010
          Disposal 1,200,000 14/05/2019
          Total Gain 500,000
          PRR 308,411 66 107
          Capital Gain 191,589
          Lett Relief 40,000 Qual Days 1278
          Net Gain 151,589
          CG Allow 11,000
          CGT 39,365

          CGT Bill 39,365

          Not bad for a Capital Gain of £200,000

          Regards Peter



            Thank you very much for that. That worked example really nails it for me. Very reassuring and much better than the grim picture I was starting to imagine before joining this forum. I appreciate the time and effort that you have gone to to work through my example.



              I'm here too!

              Can you kindly put more meat on the bones of:

              PRR 308,411 66 107 and the 'qual day's part of Lett Relief 40,000 Qual Days 1278

              These confuse me so I'd really appreciate it.



                PRR 308,411 66 107 is £ 308,411 relief apportioned by the residential period over the total ownership period, 66/107 months.
                Letting relief is the lowest of the PPR of the actual let days or a max of £40,000. Remember that the 18 months PPR relief can not be counted as let days.
                Regards Peter


                Latest Activity


                • Reply to CGT check appreciated, thanks in advance!
                  by Gordon999
                  OK. Your capital gain =£22,242 less £12, 300 = £9942 x 18% = £ 1790 tax bill to pay.
                  17-10-2021, 17:53 PM
                • CGT check appreciated, thanks in advance!
                  by tatemono
                  Would really appreciate some help checking figures. Figures below are halved because my sister and I inherit in equal shares.
                  • property valued at £187,500 at date of mother's death in Jan 2015
                  • recent sale value £217,500
                  • improvement costs £5,318
                  • costs of sale: £2,440.50
                  • no reliefs
                  • my profit
                  16-10-2021, 15:15 PM
                • Reply to CGT Query
                  by jessa46
                  Thanks for reply, much appreciated.
                  I asked my solicitor about the 30 day rule and he emailed me back saying I didn't need to do this as no cgt to pay but, as I do a yearly self assessment, to include it my self assessment. I'll be sending it off this week. There's a website called 'xxxx' which...
                  17-10-2021, 16:33 PM
                • CGT Query
                  by jessa46
                  I have never claimed CGT allowance but may need to after selling an inherited property. The property gained in value during probate. The sold price was £153k and the valuation at death for 'capital gains purposes' was £130000. There are 3 shares. My share of selling price is £51k and share of gain...
                  13-10-2021, 17:37 PM
                • Reply to CGT Query
                  by AndrewDod
                  - You have to submit the CGT calculations within 30 days regardless of whether there is CGT to pay (else you get large and increasing fines)

                  No it is not added to your income for this purpose
                  17-10-2021, 15:54 PM
                • Reply to CGT Query
                  by jessa46
                  Thank you for replies. Re how it was valued, this is where my head spins. Our mum passed away around 8 years ago. We got probate in 2019. Property was transferred into 3 siblings names in 2020, so that we could benefit from personal CGT allowance. The solicitor sent us a document 'for hmrc cgt purposes'...
                  17-10-2021, 15:13 PM
                • Reply to CGT check appreciated, thanks in advance!
                  by AndrewDod
                  I'd imagine it would be payable as CGT by the individuals. Certainly that would apply to interest earned on savings during probate so don't think CGT would be different. It is definitely not payable by the estate (that would be grossly unfair to some beneficiaries who had not used various allowances)....
                  17-10-2021, 13:05 PM
                • Reply to CGT check appreciated, thanks in advance!
                  by tatemono
                  thanks for your comments everyone. Alas Gordon999, although you were aware of my first statement that the property was shared between two of us, the figures I gave were already halved. You then went on and halved the gain which effectively halved the figures once more! My gain is around the £22K figure...
                  17-10-2021, 12:57 PM
                • Reply to Need LTB on our home to buy another property to live in - help please?
                  by Advice seeker
                  Thank you JP and Gordon, really, this is very helpful to me!

                  All being well JP I can get this all done within the 9 months, am aware this is a challenge! Would have been so much easier when 18 or 36 months!

                  On the tenant side Gordon, I am in contact with a university accommodation...
                  16-10-2021, 19:33 PM
                • Need LTB on our home to buy another property to live in - help please?
                  by Advice seeker

                  We want to make an offer on a property but the highest current offer doesn't need to a sell anything to purchase, so in a better position than us.

                  If we do a LTB on our home (so we are in same position) with a 6 month rental contract then sell asap after this to be within...
                  06-10-2021, 15:36 PM