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Have you paid iincome tax on the rent received please via self assessment returns?
There are a number of steps you need to take to calculate your gain as follows. Could you confirm if you are married?
Thanks. You will need to consider the following steps to calculate your gain. The first step is to work out the area of the house that has been rented out. e.g. If you have rented out 50m2 of a 150m2 house then you have rented out 1/3 of the property.
You then calculate the number of years of gain - here you have 7 years of gain based on what you say.
You can ignore the last 3 years of the gain so you are dealing with 4 years of the 7 years of gain.
Finally you can apply any other reliefs that are available as follows:
Here because you have occupied the property you can apply lettings relief. The maximum amount of Letting Relief due is the lower of:
You can also deduct any monies spent on things like improvements from the gain.
Would you like me to assist with a rough calculation? To perform a final calculation you will need to know what the property actually sells for but you can calculate an approximate calculation using your estimates now if you wish. I would need to know the approximate area of the house you have rented out in percentage terms to do so?
Thanks - one query are there no shared communal rooms? e.g. bathroom kitchen etc? The reason I ask is that 3 out of 4 bedrooms in a normal house would not equal a 25/75 split because there is a sitting room kitchen etc?
Thanks. What proportion of the house overall do 3 out of the 4 rooms comprise would you estimate?
OK so for the purposes of this calculation I shall use a figure of 28% having been let out. Obviously you can refine this if you wish.
Thanks. If you could bear with me while I produce a calculation...
Calculation as follows. Assumes you have made no other losses you can offset gain by and that you are not a basic rate tax payer.
Gain is 500000Discount 3 years of 7 years of gain, gain is 285714Gain after applying annual exempt amount of 10900 is 296614Remaining annual exempt amount is 0Gain after applying losses brought forward of 0 is 29661428% of gain after applying PPR relief on the balance is 83052Gain after application of private lettings relief of 40000 is 43052Basic Rate Band Remaining is 32010. 457090 Taxable at 28% = 12055
Is there anything above I can clarify for you?
You can also take off cost of purchase and sale from the gain but you will not know the latter yet and this will only make a marginal difference.
If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with though please reply back to me though.
The last three years is always disregarded. Bear with me and I will see if I can find references for you...
Here is the reference for the percentage that you allocate to the lodgers:http://www.hmrc.gov.uk/manuals/cgmanual/CG64702.htm
Here is the authority for the final three years being exempt:http://www.hmrc.gov.uk/manuals/cgmanual/CG64985.htm
You will appreciate the above is taken from HMRCs tax manual so is rather dry. I hope it is of use.
Does the above answer all your questions or is there anything I can clarify or help with any further?
Thanks but what you are saying slightly contradicts what i m reading here
http://www.hmrc.gov.uk/agents/toolkits/cgt-land-buildings.pdf page 19, example at bottom of page.
The difference seems to be in the interpretation of 'lodger' or 'residential letting accommodation'
Can you clarify any further?
Sorry I am not clear on which part you feel is contradictory - could you kindly explain a little more what you mean?
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