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# Calculating CGT on part let, part lived in property

Calculating CGT on part let, part lived in...

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Forward planning scenario:

Property purchased in 1996 for £70,000
Main residence for 3 years to 1999
Let for a total of 8 years from 1999 to 2007
Sold for £220,000 in 2007
Total gain £150,000
Asset to be held for 11 years

Ignoring indexation allowance and on the basis of my understanding that
- the final 3 years are tax free
- there is an additional letting relief allowance of £40k
- non business assets held for over 10 years are taxed at 24%
- tax rules won't change!
I have worked out the likely tax bill as follows:

Gain: £150,000

Taxable gain before allowances: £68,182 [£13,636 (1/11th of gain) x 5 (taxable years)]

Less allowances: £47,200 [£40k plus personal allowance]

Taxable gain: £20,982 [£68,182 - £47,200]

Tax @ 24% = £5,036

Many thanks

Sharon Jordan

### Replies

17th May 2001 19:17

What if spouse takes 50% ownership in 2001?
Would the spouses ownership mean that 50% of the gain would now be treated without the benefit of letting relief allowance or the 6 years tax exemption, bearing in mind that the spouse never resided in the property?

Thanks (0)
By Anonymous
18th May 2001 08:27

Correct Jamie
Sorry. The taper relief should be 40%

i.e. Less 40% taper relief to £16908.

Less estimated annual exemption (£7500) to £9408

Which will be charged at your marginal rate of tax i.e. 40% of £9408= £3763.

If the spouse has never resided in the property he/she will not be entitled to letting relief. Where does the spouse live? He/she cannot have a second PPR. Any planning element will need further details!

Thanks (0)
By Anonymous
17th May 2001 17:35

Bonus Year?
As the asset was owned on 17 March 1998 you are also entitled to a bonus year of taper relief (the full ten).

Chargeable gain £150K (less indexation which will be negligible)

Chargeable gain after PPR will be (5/11ths) £68181

I'm not 100% but I think you take the letting relief before the taper relief £68181-£40000 = £28181

Less 60% taper to £11272

Less estimated annual exemption (£7500) to £3772

Which will be charged at your marginal rate of tax i.e. 40% of £3772 = £1508

Please note that if the property is in joint ownership bother parties will be entitled to the letting relief exemption and the total gain will be exempt.

Thanks (0)
By Anonymous
17th May 2001 17:56

Re: Taper Relief
Should the 60% be the amount remaining chargeable rather than the amount of relief given ?

Thanks (0)
By Anonymous
17th May 2001 13:56

Try This...
Proceeds less Cost is Unidexed Gain of £150k. Less indexation from 1996 to 1998 (say) £10k. Therefore indexed gain is ~£140k.

PPR for 6 of the 11 years of ownership reduces gain to £64k, less Letting Relief ( based on your figure) of £40k, gives £24k.

Qualifying period of ownership for taper relief is 9 years ( 1998 - 2007), asset is non business asset therefore chargeable portion of gain is 65% ie: £15.6k. Less Annual exemption of ~£7k = £8.6k at 24% = tax to pay £2k.

Thanks (0)