CGT land & property

CGT land & property

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My client bought a house in 1996 and lived in it for 9 years. He paid £44,500 for the property. He has let it on a shorthold tenancy agreement since August 2005 and now wishes to sell the house.

He has been told that if he sells it within three years of leaving it then there would be no CGT. Can anyone confirm that for me?

Also he has suggested that he would move back into the house for a while before selling. I understand that it would have to be a minimum of one year to be exempt from CGT?

Grateful for any help.

Thanks

Maz

Maz K

Replies (5)

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By maz444
19th Mar 2008 14:31

Thanks for all the help on this. It has been invaluable. Hope I can help all of you sometime.

Thanks

Maz

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Euan's picture
By Euan MacLennan
18th Mar 2008 17:38

Lettings relief
I agree that there is no point in moving back to the house, but would add that if the house is not sold until after August 2008, the gap in the period of ownership that would not be covered by PPR relief would be covered by a further relief, known as lettings relief, up to the lesser of the same amount as the PPR relief and £40,000. No need to rely on the annual exemption.

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By maz444
18th Mar 2008 16:44

Thank you!!
Thank you that was so helpful.

Maz

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By bigdave1971
18th Mar 2008 15:11

Yes and no (to original questions!!)
As your client has lived in the property then the period of occupancy plus the last 3 years of ownership are exempt from CGT (PPR relief).

Therefore if your client sold the property no later than August 2008 then the whole period of ownership will be covered by the PPR relief.

There is no need for the client to move back in to the property but if he did then there would be no further reliefs available.

If your client kept the property and sold it in August 2009 having not let it out again then one year out of 13 would become taxable (i.e. 1/13 x gain) but this may be covered by the CGT annual exemption anyway.

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By AnonymousUser
18th Mar 2008 15:08

No point in moving back
From what you say the house was your client's principal private residence (PPR) from 1996-2005. If so, then the last 3 years of ownership will also qualify for the PPR exemption. Thus, if your client was to defer the sale until 2009 without moving back in to the house, then the PPR would exempt 12/13 of the gain (9 years of actual occupation plus the last 3 years). Moving back in would make no difference, as it's the last 3 years that count - thus in the case of a sale in 2009, the year 2005-06 would fall outside the exemption as being neither an actual private residence nor within the last 3 years of ownership.

I hope this helps.

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