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  • Tax

    CGT Numbers- Moving into BTL

    Just want to run some numbers and ideas by you guys! Hoping someone can confirm or expand on

    I have owned and let a BTL property for 48mths. During this period the price has increased from £460,000 to £560,000. The rent over this period was £72,00 (£18k/yr). Lets say Stamp Duty and general costs were £20,000. Higher rate tax payer for simplicity.

    I intend to move into the property (along with all necessary proof). If for some reason something comes up and I need to move in 6 months time I will sell. Total ownership period of 54 months.

    I believe if I just sold without moving in my CGT bill would be £22,400. If I move in first my CGT bill will be £15,000 lower.

    Do these numbers look correct?

    £100,000 Gain

    - £20,000 expenses/costs

    = £80,000 Gain

    54 months (£80,000) - 18 months PPR (£26,666)

    =£53,333 gain

    - Lettings Relief at £26,666

    = 26,667 Total Gain

    28% = £7446 tax payable (I've already used my personal cgt allowance. Higher rate tax)

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    If you live in the property for 6 months you may not have to pay any CGT - I believe there is  precedent where someone lived in a house for a very short time and avoided CGT... I think it went to court... best to run it by a professional....

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    use search bar on PT - has been discussed before.

    one such topic.

    https://www.propertytribes.com/minimise-c...35566.html

    Quality of occupation case law. - difference in opinions in case law. - best to get actual tax advice from qualified professional?

    (no recommendation of this firm just article for info only)

    https://www.rossmartin.co.uk/sme-tax-news...nce-relief

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    Coming soon Investorsk8.com

    Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs. 


    I don't quite understand why you are using 18 month, it should be 24 months (which includes the 6 months you lived at property)

    So Private Residents Relief (Not letting relief) should be = 24/54 x 80,000 = £35,556

    So gain is £44,444

    Letting Relief is £40,000

    So total gain is £4,444

    So tax to pay is £1,244

    I believe what I have written above is correct but do check


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    As mentioned above it is quality of occupation not quantity but HMRC may challenge a period as short as 6 months.

    Otherwise your calculations are correct as your 6 months occupation is within the final 18 months, you would only get 18 months.

    Deb

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA


    Thanks Debbie. The main/only issue I can see with the quality of residence would be the empty flat I would be moving out of.

    Perhaps an attempt at letting would do the job? Or perhaps advertising for sale?

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    the more evidence to support your intention the better yes.

    Deb

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA