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Selling Second House

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Paulie
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Joined: May 7th, 2019, 1:43 pm

Selling Second House

#219996

Postby Paulie » May 7th, 2019, 1:46 pm

Hi,

Quick question. I have a house which was formerly my home until 3 years ago. I now let it out and live in a newly built property. I am seeking to sell the rental property. What taxes would I become liable for?

thanks

StepOne
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Re: Selling Second House

#220009

Postby StepOne » May 7th, 2019, 2:51 pm

Paulie wrote:Hi,

Quick question. I have a house which was formerly my home until 3 years ago. I now let it out and live in a newly built property. I am seeking to sell the rental property. What taxes would I become liable for?

thanks


This should explain it ; https://www.gov.uk/tax-sell-home/let-out-part-of-home

StepOne

DrBunsenHoneydew
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Re: Selling Second House

#220035

Postby DrBunsenHoneydew » May 7th, 2019, 5:52 pm

Paulie wrote:Hi,

Quick question. I have a house which was formerly my home until 3 years ago. I now let it out and live in a newly built property. I am seeking to sell the rental property. What taxes would I become liable for?

thanks

Let out for 3 years means no capital gains tax at all unless the house gained value at an average rate of over £80k per 3 years of total ownership.

Lanark
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Re: Selling Second House

#220061

Postby Lanark » May 7th, 2019, 8:19 pm

StepOne wrote:
Paulie wrote:Hi,

Quick question. I have a house which was formerly my home until 3 years ago. I now let it out and live in a newly built property. I am seeking to sell the rental property. What taxes would I become liable for?

thanks


This should explain it ; https://www.gov.uk/tax-sell-home/let-out-part-of-home

StepOne


Wow that is such a complicated set of rules, I read it 3 times and I still don't know what it means!

Hariseldon58
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Re: Selling Second House

#220074

Postby Hariseldon58 » May 7th, 2019, 10:14 pm

A friend who had owned and let out a property, interspersed with periods of owner occupation over 40 years had made a significant gain as you might imagine.

The rules are complex but surprisingly generous and the CGT payable was only around £1,500 !

It’s worth getting a grasp of the rules or paying an accountant to help you.

PinkDalek
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Re: Selling Second House

#220076

Postby PinkDalek » May 7th, 2019, 10:29 pm

Hariseldon58 wrote:A friend who had owned and let out a property, interspersed with periods of owner occupation over 40 years had made a significant gain as you might imagine.

The rules are complex but surprisingly generous and the CGT payable was only around £1,500 !

It’s worth getting a grasp of the rules or paying an accountant to help you.


Especially as both Lettings Relief and the final period exemption may be restricted wef 6 April 2020:

CGT Lettings Relief [and other] changes
viewtopic.php?f=49&t=16560

Paulie
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Re: Selling Second House

#220082

Postby Paulie » May 7th, 2019, 10:47 pm

Thanks to all.

Complicateder and complicateder.

As it is jointly owned I imagine the same allowances apply to my wife, effectively doubling the allowances.

Equally I guess I am lucky that it is the north, where gains have been more limited.

Hariseldon58
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Re: Selling Second House

#220131

Postby Hariseldon58 » May 8th, 2019, 9:53 am

Regarding the CGT on house disposal, aside from Lettings Relief which can be very generous, you can also make allowances for some improvements to a property. ( You need to check carefully, it does not include repairs)

StepOne
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Re: Selling Second House

#220155

Postby StepOne » May 8th, 2019, 11:25 am

Lanark wrote:
StepOne wrote:
Paulie wrote:Hi,

Quick question. I have a house which was formerly my home until 3 years ago. I now let it out and live in a newly built property. I am seeking to sell the rental property. What taxes would I become liable for?

thanks


This should explain it ; https://www.gov.uk/tax-sell-home/let-out-part-of-home

StepOne


Wow that is such a complicated set of rules, I read it 3 times and I still don't know what it means!


I know what you mean - but I went through it when I sold a flat a couple of years ago, and it's actually not that bad if you have a real example. The basic premise is that you get relief based on the proportion of time you live in a property. So it you owned it for 10 years, lived in it for 4 and then rented it out for 6, you get 40% relief.

Then there is the additional 18 months relief that everyone gets (for some reason) which would bring it up to 55% in this case. Then you get lettings relief, which is the same amount again, but capped at 40k.

It's actually pretty generous. I had gains of almost 100,000 on my flat, and ended up paying no CGT. I can see why they are going to reform it.

StepOne

PinkDalek
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Re: Selling Second House

#220166

Postby PinkDalek » May 8th, 2019, 12:06 pm

Lanark wrote:Wow that is such a complicated set of rules, I read it 3 times and I still don't know what it means!


StepOne wrote:... Then there is the additional 18 months relief that everyone gets (for some reason) which would bring it up to 55% in this case. Then you get lettings relief, which is the same amount again, but capped at 40k. ...


Beware though that one can't overlap/double count the final period exemption with Lettings Relief.


More generally, I recently went through a worked example over at Taxes (albeit the Topic was the one I mentioned earlier regarding the potential changes):

viewtopic.php?p=214403#p214403

Help Sheet 283 is another source for worked examples and worthy of a study:

Guidance
HS283: Private Residence Relief (2019)
Updated 6 April 2019

https://www.gov.uk/government/publicati ... elief-2019


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