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Oct, 2014

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  1. #1

    Default CGT planning for a beginner.

    Just trying to plan ahead and work out PRR if we sell in 5 years and a 10 year calculation also..... Have I got my head around capital gains tax?

    Married couple, bought our flat in Sept 1993 for £40K. It's probably now £150k. Gain of £110K

    Have been letting it since November 2011 and intend to continue to do so.

    Moved out August 2011 so period of occupation (by August 2014) = 215+36 months, total 251 months.

    Calculation in 5 years time from now 251/275 =.913 x £110,000 = total PRR £100,430

    Calculation in 10 years time from now 251/335 =.749 x £110,000 = total PRR £82390

    Sell in 5 years time (I know the value of the flat won't be the same) and have £9570 CGT before both our personal allowances and letting relief, taking CGT due to zero.

    Sell in 10 years time and have £27610 CGT, the above allowances again taking it to zero.

    (Please do forgive me if my figures are out)

    Have I got the right idea or am I just being hopeful?

  2. #2
    Join Date
    Aug 2008
    Posts
    2,530

    Default

    Looks about right. I haven't checked any of your numbers, but you could pay an accountant to do so.

  3. #3
    Join Date
    Aug 2008
    Posts
    3,419

    Default

    I think you are not hopeful enough. After 10 years I would expect the flat value to rise by 3 % per year and gain 30% higher value.

    But if the lease term falls below 82 years, then you may have to consider switching to another property.

  4. #4

    Default

    Okay, thanks both - that looks like good news.

    We were able to extend the lease last year from 73.5 years up to 163.5 years at a total cost of £10300 (including all costs involved), so we'll be okay on that front.

    Again, thanks for your help.

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