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Selling Second House
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Selling Second House
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
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
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- Lemon Slice
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Re: Selling Second House
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
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- Lemon Slice
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Re: Selling Second House
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.
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- Lemon Quarter
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Re: Selling Second House
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!
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- Lemon Slice
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Re: Selling Second House
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.
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.
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- Lemon Half
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Re: Selling Second House
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
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Re: Selling Second House
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.
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.
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- Lemon Slice
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Re: Selling Second House
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)
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- Lemon Slice
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Re: Selling Second House
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
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Re: Selling Second House
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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