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  • Tax

    Private residence relief calculation

    good morning everyone i wonder if anyone can help me on my tax question,

    i brought a house lived i  there fir 2 months have since rented it for 50 months while renting a room at my girlfriends house, if i know want to sale is this the right calculation for cgt.

    2 months + 18months private residential relief / 50 months let out  x 120000 gain

    48000  -  11300 =36700

    28% tax because i earn 44k ? this year

    £10276 bill thk your very much thieving gov.co.uk !

    is there any way around this and are all fees taken off original buying fees stamp duty and sale fees?

    i own the house out rightnot sure whether to sale or remorgage and buy half house with my girlfriend or cash out buy a flat or hmo up north :-)

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    Lettings relief should be available to reduce the gain dramatically.

    Stamp duty and other purchase / sale costs will be available to deduct.

    P.s the figures you detail in your post don't quite make sense.

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    Dear Tony,

    I agree with Sean that your figures do not quite make sense here.

    On the assumption that this is a property that was your main residence which was subsequently let, then 20 months (last 18 months, plus the 2 months residence) out of 52 (total ownership months) would be your PPR relief, calculated as £120k X 20/52 = £46,154.  Using this same assumption, lettings relief of £40k may be added, giving total reliefs of £86,154.

    So if we take your £120k gain, subtract the £86,154, and subtract the annual exemption of £11,300, you are left with a chargeable gain of £22,546, which at the 28% rate of tax is £6,313.

    That being said, I am unsure whether your £120k gain you mention takes into account all the typical deductions, such as stamp duty, solicitor fees, estate agent fees etc.   If it does not, then your tax bill could well reduce further.

    Hope that gives a brief outline of the position, and if in any doubt, professional property tax advice would be recommended.

    Best wishes,

    RITA4Rent 

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    RITA4Rent (Rental Income Tax Advisors)

    Specialists in Landlord Taxation

    Recommended tax advisors of the Residential Landlords Association

    Follow us on Twitter @Rita4Rent

    clients (at) rita4rent (dot) co (dot) uk

    http://www.rita4rent.co.uk


    Unfortunately it may be that PPR and letting exemptions are denied if the property was only your residence for 2 months.

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA

    omg that would be a bit harsh if its my only house and i sold my original home thats i lived in for years:-(

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    Exactly what I was going to say.  

    2 months.!!


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      BTL - Vacant £450 PCM | Only £57951  in PT Marketplace.

    Not having a Plan. If you Fail to Plan, You're Planning to Fail.

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

    hi thk you for your replies i did contact rita earlier for a brief chat , i mean this is my only home i dont know if i get  lettings relief and if i didnt get PPR am not sure ?

    i sold  my original house to move areas and become an accidental landlord really when i decide to move in with my girlfriend and closer to work.

    so could i include the fees for the sale of  my original house which was 6 months earlier ? and all the stamp duty and moving fees for new property.  i image the gain would to between 110 and 120 k what would happen if i moved back into the property for 24month would i get an extra 6 months relief ?

    the property is 375k or more valued today rented for 1250£ brought for 247.500  , not sure if remorgage to still prduce some income and go halfs with my girlfriend on a new place and buy a flat or few hmos up north or hmo my orignal property , too many questions for my pea brain :-)

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    https://www.gov.uk/tax-sell-home/let-out-part-of-home

    You get full relief for:

    • the years you lived in the home.

    There may instances of less accepted

    You are already on thin ice with PPR

    See other cases,

    Google - Quality of occupation

    give hrmc a call they can help with calculation.

    Good luck.

    It it works for you let me know. You have just discovered a perfect strategy to avoid CGT

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      BTL - Vacant £450 PCM | Only £57951  in PT Marketplace.

    Not having a Plan. If you Fail to Plan, You're Planning to Fail.

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