Now letting-out previous main residence: CGT effect?

[SteveD]

Hi,
Looking for a bit of advice re renting out my home.

I have rented out my house and purchased another as we needed more space for the kids etc etc.

It has been let out now for 3months and ideally I would have liked to have sold, but no takers, now I have a tenant who pays £550 a month, and would i need to sell before the 3 years is up so not to pay CG tax, here are a few details:


House Purchased in 21/02/1994
Cost £41K
Sale price £119K ish!
Was main residence from 21/02/1994 until 21/05/2009
Rent received £550 per month
Currently no mortgage on property
Rent is declared as I am self employed and it goes as extra on my accounts, also use a rental management co who takes 10%


What I would like to know is that would I be liable for the full 18% of CGT if I sell after 3 years?

Any advice appreciated,

Steve

[TaxationPete]

After the PPR 36 months exemption Letting relief cuts in to further offset CG for up to £40,000 per PPR qualified owner so it could by 5,6,7,8 or even more yeras before you have a CGT liability depending on what house prices do. In addition rememebr that even if you do have a CGT liability it is because to mave made a profit and 82% of it is yours. Regards Peter

[TaxationPete]

Further, if you wife is a joint owner then 1/2 the rental income should be declared by her, may be attracting a lower tax bill. Regards Peter

[SteveD]

Hi Pete,
Thanks very much for the info and i just needed clarification that it would be at least 3 years or so before i would be liable for CGT, the house is in my name only and the new one is in both names, ideally i would have liked to have sold, but its not a problem keeping hold of the house, as the tenant seems to be excellent so far and it was mainly that if they stay a long term, which is what they want i just wanted to be sure that I would be liable for CGT if they stay over the 3 years or I sell with the house tenanted,

I don't know if it makes a difference but there was a mortgage on the house when first purchased of 39K but have paid this off.

thanks again for the info,

[Telometer]

If sold for 120k and bought for 40k then it will be about 11 years after you move out before you owe any tax. (Allowing for PPR, letting relief and an annual allowance.)

[SteveD]

Sorry for the late reply,
thanks very much for the advice, made me feel a lot better knowing i have a few extra years before deciding to sell,

Cheers
Steve