How do I calculate the Capital gain on a private house which was later rented out ?

How do I calculate the Capital gain on a...

Didn't find your answer?

Client owned a house for at least 10 years and lived in it as his home.

He moved out about 5 years ago, renting it out for the first 4 years (no letting income 2007-08).

During 2007-08 he sold the house.

What is the best way to calculate any capital gain?
Richard Langner

Replies (3)

Please login or register to join the discussion.

avatar
By User deleted
03rd Sep 2008 16:37

May be
Marcus is spot on if the landlord was declaring the rental income/loss to HMRC or letting releif will be denied. Remember PPR relief is calculted in Whole months from the day of exchange of contract to the exchange on sale and LR is based on every complet day the property is actually let, not void times of the period covered by PPR exemption. Regards Peter

Thanks (0)
avatar
By User deleted
03rd Sep 2008 16:34

CGT
If you are struggling with CGT comps I'd recommend either:
Going through the step by step instructions included with the HMRC manuals; or
Buying Tolley's Capial Gains Tax (Workbook version half the price and most of the information) for about £30ish
It'll save you a lot of grief in the end.
If anyone's shaky on the whole subject Tolley's taxwise is an excellent book which will quickly update and remind you of what you need to do.

Thanks (0)
avatar
By AnonymousUser
03rd Sep 2008 15:17

Likley to be no gain
There is likely to be no gain as set out below:-

If we say there are three distinct periods of use of the property:-
period A (120 months) as main residence then
period B (48 months) let out then
period C (8 months) vacant

Once you calculate the gross gain in the normal way (proceeds less selling costs less original cost less acquisition costs, assuming no capital improvements for the purposes of the example) the resultant gross gain qualifies for PPR releif as follows:-

PPR releif all of period A, all of period C and the last 28 months of period B, a total of 156 months.

PPR lettings relief remaining 20 months of period B, subject to this being less than the lower of the gain qualifying for PPR (a given in this case) and £40,000.

There would only be a taxable gain if the gain attributable to the 20/48 months of period B exceeded £40,000.

Hope this helps

Thanks (0)