CGT on sale of property

King of the Mountains

A friend of mine bought a new house about 18 months ago. They decided to keep the original property they had bought and rent it out. This property was bought quite along time ago so if they decide to put it on the market, even though they lived there until recently. Will they have to pay CGT. I know the first £9,600 of chargeable gains are tax free for this tax year. Thanks

JodieR

No they won't. What happens is the gain is time apportioned, so say they had owned the house for 15 years (and lived in it for 13.5 years of that), 90% of the gain would qualify for PPR (principle private residence) relief, and 10% of the gain would be taxable, HOWEVER, there is further relief - if you have at any point lived in the house which you're selling, the last 3 years which you owned it you're deemed to have lived in it for CGT purposes, so none of the gain will be chargeble to CGT.

Jodie

King of the Mountains

Thank you JodieR. I searched everywhere for the info.