Letting relief

[stephenp]

Hi,
if i had a house which i had owned for 28 years, the first 3 i had lived in as my permanent residence and had a gain of £100K upon sale please consider the following

A)
gain 100
- letting relief 40
= Chargabele gain 60
- less taper relief 24
- less pers. allwnc 9
=chargable gain 25
CGT Payable 40% 10

B gain 100
prr 10
letting relief 10
gain 80
taper relief 32
pers all 9
charg gain 39
cgt 40% 15.6


option a looks favourable as i understand you can only claim the lower of Prr already calculated as letting releif if you dont claim any prr can you claim the full 40K letting relief??

also if you can do this if a had a valuation at the point of letting, ie 3 years into owenrship, could i take the value from their to calculate the gain and ingnore prr totally and us the full £40K letting relief.

your thoughts are much appreciated
Thanks
STEVE:eek:

[Tax Accountant]

Hi,
if i had a house which i had owned for 28 years, the first 3 i had lived in as my permanent residence and had a gain of £100K upon sale please consider the following

Let's not get carried away with hypotheticals and long winded queries.

A)
gain 100
- letting relief 40
= Chargabele gain 60
- less taper relief 24
- less pers. allwnc 9
=chargable gain 25
CGT Payable 40% 10

Letting relief will be nil if PPR relief is nil.

B gain 100
prr 10
letting relief 10
gain 80
taper relief 32
pers all 9
charg gain 39
cgt 40% 15.6

On a house which is owned for 28 years, the first 3 lived in, PPR would be 6/28 x £100K = £21K and therefore letting relief will also be £21K.

option a looks favourable as i understand you can only claim the lower of Prr already calculated as letting releif if you dont claim any prr can you claim the full 40K letting relief??

Don't let your imagination run wild.

also if you can do this if a had a valuation at the point of letting, ie 3 years into owenrship, could i take the value from their to calculate the gain and ingnore prr totally and us the full £40K letting relief.

All gains are spread evenly over the whole period of ownership and there is no scope for inserting any in-between valuations.

your thoughts are much appreciated

But don't count on it if you persist with figments of your imagination.

Thanks
STEVE:eek:

See comments above in red.
Ramnik

[stephenp]

Sorry, i just thought giving you more info would make it easier to anwser for yourself.

Why is PRR 6/28th if the house was only lived in for 3 years????????

Thanks

[Tax Accountant]

Sorry, i just thought giving you more info would make it easier to anwser for yourself.

What you were giving was not more information but running wild scenarios.

Why is PRR 6/28th if the house was only lived in for 3 years????????

Quote from my reply to your earlier posting yesterday:

''If you live in it for 3 years (all exempt) and then let it for 10 years (final 3 years exempt due to using it as your residence earlier) , you will have a total of 6 years exempt out of total ownership period of 13 years.''

Did you not read this, and if not, why not? After all, this was in reply to your own posting.


Thanks

Stephen P,

Yesterday you asked a question:
''what is the £40K letting relief and when does this apply?''

Within a few hours, and waiting for a reply, you started running a second thread headed ''Letting Relief''.

Why are you running multiple threads relating to the same issue?

Ramnik

[stephenp]

yes i did read it but was confused as to why you recieve 6years exempt if you only live in it for 3 years, does this mean that if you lived in it for 1 year you would get 4 years PRR?????

[stephenp]

Also is letting releif only available if you have lived in the property

Thanks

[Tax Accountant]

yes i did read it but was confused as to why you recieve 6years exempt if you only live in it for 3 years, does this mean that if you lived in it for 1 year you would get 4 years PRR?????

YES. If a property has been your ''only or main residence at any time in your ownership'', the final 3 years of ownership are automatically exempted. This is meant to allow you time to sell it in a difficult market but you could do whatever you like in these final 3 years, including letting, and still have the final 3 years exempted.

Ramnik

[Tax Accountant]

Also is letting releif only available if you have lived in the property

Thanks
YES.

QUOTE FROM PREVIOUS REPLY:

Letting Relief is given to reduce chargeable gains arising on the disposal of any property which has been:

'occupied as only or main residence' at anytime during the ownership
AND ALSO
'let as residential accommodation' at anytime during the ownership.

Both conditions must be satisfied.

Ramnik