The Lemon Fool

Hi,

Quick question. I have a house which was formerly my home until 3 years ago. I now let it out and live in a newly built property. I am seeking to sell the rental property. What taxes would I become liable for?

thanks

Paulie wrote:Hi,

Quick question. I have a house which was formerly my home until 3 years ago. I now let it out and live in a newly built property. I am seeking to sell the rental property. What taxes would I become liable for?

thanks

This should explain it ; https://www.gov.uk/tax-sell-home/let-out-part-of-home

StepOne

Paulie wrote:Hi,

Quick question. I have a house which was formerly my home until 3 years ago. I now let it out and live in a newly built property. I am seeking to sell the rental property. What taxes would I become liable for?

thanks

Let out for 3 years means no capital gains tax at all unless the house gained value at an average rate of over £80k per 3 years of total ownership.

StepOne wrote:

Paulie wrote:Hi,

Quick question. I have a house which was formerly my home until 3 years ago. I now let it out and live in a newly built property. I am seeking to sell the rental property. What taxes would I become liable for?

thanks

This should explain it ; https://www.gov.uk/tax-sell-home/let-out-part-of-home

StepOne

Wow that is such a complicated set of rules, I read it 3 times and I still don't know what it means!

A friend who had owned and let out a property, interspersed with periods of owner occupation over 40 years had made a significant gain as you might imagine.

The rules are complex but surprisingly generous and the CGT payable was only around £1,500 !

It’s worth getting a grasp of the rules or paying an accountant to help you.

Hariseldon58 wrote:A friend who had owned and let out a property, interspersed with periods of owner occupation over 40 years had made a significant gain as you might imagine.

The rules are complex but surprisingly generous and the CGT payable was only around £1,500 !

It’s worth getting a grasp of the rules or paying an accountant to help you.

Especially as both Lettings Relief and the final period exemption may be restricted wef 6 April 2020:

CGT Lettings Relief [and other] changes
viewtopic.php?f=49&t=16560

Thanks to all.

Complicateder and complicateder.

As it is jointly owned I imagine the same allowances apply to my wife, effectively doubling the allowances.

Equally I guess I am lucky that it is the north, where gains have been more limited.

Regarding the CGT on house disposal, aside from Lettings Relief which can be very generous, you can also make allowances for some improvements to a property. ( You need to check carefully, it does not include repairs)

Lanark wrote:

StepOne wrote:

Paulie wrote:Hi,

Quick question. I have a house which was formerly my home until 3 years ago. I now let it out and live in a newly built property. I am seeking to sell the rental property. What taxes would I become liable for?

thanks

This should explain it ; https://www.gov.uk/tax-sell-home/let-out-part-of-home

StepOne

Wow that is such a complicated set of rules, I read it 3 times and I still don't know what it means!

I know what you mean - but I went through it when I sold a flat a couple of years ago, and it's actually not that bad if you have a real example. The basic premise is that you get relief based on the proportion of time you live in a property. So it you owned it for 10 years, lived in it for 4 and then rented it out for 6, you get 40% relief.

Then there is the additional 18 months relief that everyone gets (for some reason) which would bring it up to 55% in this case. Then you get lettings relief, which is the same amount again, but capped at 40k.

It's actually pretty generous. I had gains of almost 100,000 on my flat, and ended up paying no CGT. I can see why they are going to reform it.

StepOne

Lanark wrote:Wow that is such a complicated set of rules, I read it 3 times and I still don't know what it means!

StepOne wrote:... Then there is the additional 18 months relief that everyone gets (for some reason) which would bring it up to 55% in this case. Then you get lettings relief, which is the same amount again, but capped at 40k. ...

Beware though that one can't overlap/double count the final period exemption with Lettings Relief.


More generally, I recently went through a worked example over at Taxes (albeit the Topic was the one I mentioned earlier regarding the potential changes):

viewtopic.php?p=214403#p214403

Help Sheet 283 is another source for worked examples and worthy of a study:

Guidance
HS283: Private Residence Relief (2019)
Updated 6 April 2019
https://www.gov.uk/government/publicati ... elief-2019