CGT query on investment property sale

CGT query on investment property sale

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I would be grateful for advice on the following situation.

A married couple, Mr & Mrs X purchased an investment property in August 2005 for £242k with £8.5k costs. It was never used as the family residence, and was instead let.

The couple separated in September 2009, although divorce was not finalised until last year I believe.

The property has remained in joint names ever since, and was let until December 2012, at which point the value was approximately £280k. Mr X then moved into the property in January 2013 and has used it as his main residence ever since. The property is due to be sold June 2015 for £320k, with £14k costs.

On the face of it, the gain upon sale will be £55.5k :- (320-14)-(242+8.5). If we say total ownership will be 118 months, and time as Mr X's PPR is 30 months + 18 months = 48 months, then the gain attributable to PPR is (48/118)*£55.5k = £22.5k, and so gain attributable to period of letting £33k.

If Mr X had been the sole owner throughout then it would be fairly straight forward, as lettings relief of £22.5k would be available to reduce the gain due to being let to £10.5k which would effectively be wiped out by Mr X's annual allowance.

My question is what is the affect of the fact the house has been owned in equal parts by the couple and yet only Mr X has used it for the past 2.5 years as his PPR? Does this 'dilute' the amount of lettings relief available? Alternatively are they treated as separate entities, so Mrs X's gain is half of the £33k under it's period of letting, with no further reliefs available to reduce this?

Many thanks.

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By TaxationPete
23rd May 2015 09:48

The 18 months is not available as it was actually his PPR at the time. Letting Relief is available in the normal fashion based on the number of days it was actually let. Regards Peter

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