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CGT - PPR + Lettings relief

CGT - PPR + Lettings relief

H&W have sold their rental property. They lived in it for 51 months, owned it for 185 months.

I am doing the CGT on disposal

The property is jointly owned. Can they each claim the £40,000 lettings relief or do I need to split this between them?  Many thanks

Total period of ownership 185
   
   
Period of occupation 51
Deemed occupation 36
Total occupation 87
   
   
 Qualifying Ownership (87/185) mths 0.47027027
   
   
PPR relief  £  52,906.91
(Qualifying ownership x Gain)  
Letting relief for period Oct 2001 - Nov 2012     Mrs Mr
         
         
Lower of:        
Cash sum  £        40,000    £        40,000  £        40,000
PPR  £        52,907    £  26,453.46  £  26,453.46
Gain on Letting  £  81,488.80    £  40,744.40  £  40,744.40
         

Replies

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19th Jul 2013 13:32

It's £40,000 each...

... or in your case £26,454 each. Assuming:

that the 51 months occupation is at the beginning and is occupation as the only or main residence (actual or elected, andthat it was jointly owned throughout (or was transferred into joint ownership whilst occupied as the only or main residence).

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By thomas
19th Jul 2013 13:39

Thank you Steve. The occupation was at the beginning and its always been jointly owned.

 

PPR of £26,454 + LR of £26,454 means clients gain is about £3k.  Happy days!

 

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26th Jul 2013 14:29

PPR is done in whole months or if favourable whole days. LR is always done in whole days. You also do not mention SDLT, legal and sales fees of acquistion and disposal. Regards Peter

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By BKD
26th Jul 2013 14:48

Almost correct

In this case it doesn't matter because the PPR gain is still less than the gain arising from letting, and so is the limiting factor - but the gain otherwise chargeable by reason of letting is not £81,489. It is £59,596.

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By Triggle
26th Jul 2013 15:46

Agree with BKD - gain attributable to the letting should exclude last three years already covered by PPR.

Cue heated debate.

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26th Jul 2013 16:11

No heated debate from me

I agree with BKD, but I'd only got as far as the letting element being just under 53% while the PPR element was only 47% but was more than £40,000 each. I hadn't bothered working out an amount and it didn't undermine Thomas's conclusions.

Welcome back BKD hope you had a good holiday.

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By BKD
26th Jul 2013 16:36

Thanks, Steve

Holiday was excellent, thanks - though nice to return to the relatively cool air (bordering on 40 most days where we were - I can cope with it, the kids found it a bit too much).

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By Triggle
26th Jul 2013 17:19

Steve

My comment was certainly no criticism of your comment - apologies if it was taken that way.

Indeed, welcome back BKD.

 

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26th Jul 2013 17:46

No, no offence taken

I'd simply realised that in BKD's absence I hade been adequately pedantic! :)

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26th Jul 2013 18:51

Triggle wrote:

Triggle wrote:

Agree with BKD - gain attributable to the letting should exclude last three years already covered by PPR.

Cue heated debate.

 

Not sure about heated debate, but there was a discussion about 8 years ago that the fractional approach (which could include the last 36 months) is a possibility. This is the calculation used by HMRC itself in its booklet IR87 (now defunct).

However, IMHO, HMRC was/is wrong on the fractional approach.

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