Capital gains and properties. Help please.

FlyTVR

FlyTVR

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Right, this is sort of complex and involves two properties that I own.

In Jan 2005 I bought property A. In June 2006 I bought property B.

Lived in property A from Jan 2005 to June 2006 then rented it.
Lived in property B from June 2006 to Jan 2010 and it is currently rented.

Now living in property A.

Question. If I sell property A (where I have been living for the last 6 months) what is the score with capital gains?

Also, does anyone understand this quote from the web -

You do not have to pay tax as long as:

•the property was your only home throughout the period you owned it (ignoring the last three years of ownership)
 
That quote relates to a very basic scenario, where you lived continuously in a property prior to selling it.
Or a scenario where you had lived continuously in that property except for any periods in the last 3 years.

Your situation is slightly more complex.
I suggest you ring your tax office to get the exact details relating to your case, but very simplistically this is where you stand (excuse the very rough calculations):

- You have owned property A for approx 5 years.

- For the first year it was your main residence. This automatically means that you will not have to pay CGT on it for the last 3 years (regardless of the fact that you've only been resident there for the last 6 months)
It also means that you will not have to pay CGT for the first year when it was your main residence.

- However, there is a year in the middle when you were renting it out and don't qualify from relief on CGT.

As a result you will be liable for CGT on 1/5 (one year out of 5) of any profit you make on the sale.

Due to it having been your main residence at some point in the past, I think there is also some further tax relief that you can claim on the taxable portion, but it's been a long time since I've dealt with CGT. Your tax office is the best place to find out what the current rules and allowances are.
 
Last edited:
SarahLee said:
That quote relates to a very basic scenario, where you lived continuously in a property prior to selling it.
Or a scenario where you had lived continuously in that property except for any periods in the last 3 years.

Your situation is slightly more complex.
I suggest you ring your tax office to get the exact details relating to your case, but very simplistically this is where you stand :

- You have owned property A for approx 5 years.

- For the first year it was your main residence. This automatically means that you will not have to pay CGT on it for the last 3 years (regardless of the fact that you've only been resident there for the last 6 months)
It also means that you will not have to pay CGT for the first year when it was your main residence.

- However, there is a year in the middle when you were renting it out and don't qualify from relief on CGT.

As a result you will be liable for CGT on 1/5 (one year out of 5) of any profit you make on the sale.
Click to expand...

Thanks very much for that.

To clarify, lets say I made £10K. It would be 1/5th of that - £2K. CGT is 18%, so basically £360?
 
FlyTVR said:
Thanks very much for that.

To clarify, lets say I made £10K. It would be 1/5th of that - £2K. CGT is 18%, so basically £360?
Click to expand...

Yes . . . But bear in mind that it's been a very long time since I've dealt with CGT.
This is only a rough illustration, so ring your tax office for more clarity.

I also think that there may be tax relief available on the "taxable portion" (the £2k in that example) i.e. as the property was your main residence at one time, you only have to pay CGT if that is more than £xxx
Not entirely sure what the current rules are on this, or what the allowances are - definitely worth you checking it out though.
 
Sarah - thanks for the info. Even if you are half right, that seems like good news :)

Like your photos btw.
 
Get it sorted quick.... CGT is destined for 40% shortly!
 
You'll not have to pay naff all as your CGT allowances will take care of that.
 
With the new 40% rate, the threshold is becoming 2500 quid too...
 
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