PPR relief; how much do i have?

[chriscostello]

I bought a flat in 94, lived in it to 2000, then started to rent it when i moved to Germany to work for 2 years. On my return I continued to rent the flat.

So do i have PPR releif for 94-00 or do the 2 years get i was working abroad get counted too, i.e. 94-02?

[TaxationPete]

Read IR283 on the HMRC web site. You will attract 36 months PPR exemption and then, if you have been declaring the rental income to HMRC, Letting Relief of up to £40,000 may have covered your gain. Prlease provide MM/YYY of all dates and cost at purchase and est cost now and I'll reun the numbers for you. Regards Peter

[chriscostello]

Bought 06/94 for £83k.
lived in it to 01/2000, then started to rent it when i moved to Germany to work for 2 years.
returned in 01/02 but never lived in the flat again, but I continued to rent the flat.
Current value about £256k

[TaxationPete]

I will assume your earn £25,000 gross PA for this example. If you sold prior to 06/04/08 then :
Capital Gains Summary

Purchase Price £83,000 14/06/1994
Indexation 0.124 £93,292
Legal Fees £0
Sale Price £256,000 14/03/2008
Enhancements £0
Legal Fees £0
Gross Gain £162,708
PPR Relief £102,189 £60,519
Letting Relief £40,000 £20,519
Taper Relief 40% £12,312
CG Allow'ce 1 £9,200 £3,112
CG Bill £622

If after that date :

Capital Gains Summary

Purchase Price £83,000 14/06/1994
Indexation £83,000
Legal Fees £0
Sale Price £256,000 14/04/2008
Enhancements £0
Legal Fees £0
Gross Gain £173,000
PPR Relief £107,343 £65,657
Letting Relief £40,000 £25,657
Taper Relief 0% £25,657
CG Allow'ce 1 £9,600 £16,057
CG Bill £2,890

This is due to the loss of 'Indexation' and 'Taper Relief' under the new proposed CGT rules.

Regards Peter

[chriscostello]

:) thanks for your help...

[Steve Sims]

Hi Guys

More information is required, but you may have more of a period of PPR than you think as your working abroad may qualify as a period of absence under Section 222(8) Taxation of Chargeable Gains Act 1992. This deals with living away from your main home for reasons of your job.

[TaxationPete]

Steve is referring to the fact that you left the house on a job related move, however you were only out of the country for 2 years and you have not returned to live in the property. Do you now work in a different area many miles form the flat and do you 'own' another property now. Could, or would you be prepared to move back into the flat as your genuine home to reduce/cancel any potential CGT ? Regards Peter

[Chris-in-Canberra]

G'day all. I have a question very similar to ChrisCostello's posting and would appreciate any information / advice from the experts.

I bought a house in the UK for 84,000 back in March 1999, and lived there for two months before being posted to Australia by my employer. During my three year absence, I let the house to tenants. When I returned to the UK in May 2002, I moved back in.

In May 2003, I came back to Oz - this time as an emigrant - and let the house out again.

I'm now planning to return to the UK later this year and I'm debating whether to move back into the house or sell it. Presumably if I sold it, I'd be liable for CGT - in which case I'd be grateful for some idea of what sort of figure I'm looking at. My (limited) understanding is that the three years I was posted here for work are exempt, as is the year I lived in the house between May 02 to May 03. I assume I would, however, be liable for a percentage of any gain accrued in the five years since then:confused:. Optimistically, I'd hope to get 200,000 for the place now, but realistically 184,000.

Alternatively, if I didn't sell immediately, how long would I have to be resident in the property in order to avoid CGT liability?

Thanks in advance for your expertise.

[tenant29]

Starting from this April 08, any capital gains ( less allowances ) is charged at 18% under UK Tax rules and you may also be liable to Australian Tax as a resident in Australia.

If you are away from UK for 5 complete tax years then you will be totally free of UK Capital gains tax and it may be best to sell all your assets in this current tax year and delay your return to UK until after April 2009. See Q3 and Q6 of weblink below.

http://www.hmrc.gov.uk/cnr/faqs_capgains.htm

I think you need to take proper advice from a tax consultant on capital gains arising under Australia rules on timing of your departure to avoid tax liability for capital gains.

[Steve Sims]

Your period of absence and occupation appear exempt, as are the last 36 months of ownership. Lettings relief also applies to the in between period.

Then deduct your personal annual exemption and I don't think you will be left with an amount that's as awful as you think.