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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?
- £20,000 expenses/costs
= £80,000 Gain
54 months (£80,000) - 18 months PPR (£26,666)
- Lettings Relief at £26,666
= 26,667 Total Gain
28% = £7446 tax payable (I've already used my personal cgt allowance. Higher rate tax)
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....
use search bar on PT - has been discussed before.
one such topic.
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)
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
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.
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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?
the more evidence to support your intention the better yes.