New to letting – CGT and PRR….

[alexadams]

Hello everbody,

I’ve been reading all the posts in the forum and they have been a great help. I’d really appreciate some help on the Private Residence relief and lettings relief.
I bought my house (only home) in October 2003 for £150K. It’s currently valued at £220K. I have about 17 years left on the mortgage which is £78K. I’m looking to move in with my partner over the summer, so I’m looking to rent out my house.

I’m not sure how long I will be renting the house for and when I’ll be ready to sell the house; it is partly depends on when the CGT will kick in.
I understand that I could rent out for 3 years and there would be no CGT to pay if I sold in 2010? Would the Private Residence Relief cover this in full?

How does the letting relief work if I keep renting the house out for longer? Will I eventually have some of my potential gain whittled down in a big way by CGT?

Could I reduce the CGT at any point by moving back into the house before I sell it?

Sorry if I seem a bit confused by the PRR and letting relief!:confused:

Alex

[TaxationPete]

Read IR283 on the HMRC.gov.uk web site. However the 36 months exemption will do just that no CGT for 3 years then Letting relief kicks in and offsets further CG up to the tune of £40,000 then there is Taper Relief and your annual Exemption presently £9,200. Your property rented out could well stay free of CGT got 6 years or may be 7 it all depends on house prices and the gain. CGT and your mortgage are not related, it is purely the gain from purchase to point of sale. However there is one other important value, If you remortgage just prior to first tenant all the interest is deductable from the gross rental but the money raised from the remortgage can be used for whatever purpose you choose. Regards Peter