UK Landlord Forum / Life

I have a property that I bought in 2002, it was my first, only, and main home until 2009.  I moved out because I fell in to financial difficulty and couldn't afford the mortgage payments, or to sell because the property was in negative equity so I rented it out.  It's now on the market for sale and I had assumed that Capital Gains Tax wouldn't apply because the property is the only one I own and was purchased as my home.  I don't have a BTL mortgage, just permission from the bank to rent it out as I'm in financial difficulty.  If I do have to pay Capital Gains Tax, there'll be no point in me selling so I wondered if anyone could give me info on this.  I realise I'll probably need to see an accountant to calculate things in detail but I'd really appreciate a quick overview on this and whether there's anything I can do. 

Lets have some figures;

Your income
Purchase Price
Potential Selling Price

Provided this is your only home, you are fine.

The only thing is if you were pushed, have to say you moved back into the property, albiet for one night, to get the last three years added to you "PPR" claim. Although if you didn't have another PPR this I dont think will apply.

So you dont need the numbers if what you say is true, you are fine.

But don't take my word for it!

Hello thank you both for replying.  Sorry for the delay in coming back, I don't usually post and run but have had a bit of an eventful couple of weeks!

I did a little more reading and think I may be ok due to my CGT personal allowance of £10,900 and the letting allowance.  Still, I'll give you some figures as requested and hopefully this will help. 

My earnings - I know this sounds ridiculous but I'm self-employed doing a few different jobs so until I do my accounts, I don't honestly know how much but it's below the higher tax rate. 

- My gross profit for the property will be £85,500 divided by 12 years. 
- I lived there for 7 years, my husband with me for 3 of those and helped me with looking after it after I let it out although the mortgage and all finances for it have remained solely in my name.  I'm assuming that he would have a claimed interest although I'm not sure the best way to calculate that - just for the 3 years he lived with me or for half of the profit in the time it has been rented out too.
- I understand there's an allowance for the last 18 months a property is rented out so that would make only 3.5 years of the rental period taxable - making a taxable profit of £24,937
- From there, I believe I have a personal allowance of £10,900 and also the Lettings Allowance of either £40,000 or the taxable amount (whichever is lower) would mean no tax is due on the remaining about. 

Is that correct? 
-

I think you are absolutely right with your figures.

I'm in a similar situation to you though I've owned my house for longer and would have a bigger profit if I sold it now. I created a spreadsheet to work out the capital gains at different times and at different sale prices. I've just fed in your figures and came out with exactly the same answers as you.

As far as I can remember, that Final Letting Allowance that you mention will cancel out the £24,937 that you calculated and so you don't even have to consider the personal allowance of £10,900 (which could be useful if you were to sell anything else during the tax year.)

In answer to an earlier post, there is no need to move back into the house to get the relief, (although as the poster mentioned that might be necessary if you have other properties) and the relief has now been reduced from 3 years to 18 months.

Good luck with your sale.

Thanks Y2Z2Y, I really appreciate your reply.  Apologies it took me so long to respond.  Good luck with your own sale.