Thank you for your question/reply.
Capital gains tax calculation – values are an example only
EXAMPLE WITHOUT DATES
Main residence (say 13 years) = 156 months
Rented period ( say 12 years) = 144 months
Total period of ownership (say 25 years) = 300 months
Capital gain say = £100,000
The property was her main residence for approx 20 years including time when it was a council property and you rented it. I have taken main residence period from time of ownership and I make it aprrox 13 years. Also I have assumed potential capital gain of £100,000.
Private residence relief = 156 months
The final three years (36 months) always qualify for relief, even if you weren't living there, as long as it's been your only or main home at some point during the time that you've owned it.
Additional private residence relief = 36 months
Total period of ownership = 300 months
Capital gain = £100,000
Period covered by private residence relief (156+36) =192 months out of 300 months
192/300 x 100,000 = £64,000
Gain subject to CGT (100,000-64,000) = £36,000
Although the property has been let for approx 12 years to present date, because it was her main residence at some point, there is a further relief available called “letting relief”.
The maximum Letting Relief due is the lower of:
- £64,000 (the Private Residence Relief due)
- £36,000 (the gain on the part of the property that's been let)
Letting relief= £36,000
Gain chargeable to CGT Nil as the gain is covered by letting relief.
I hope this is helpful and answers your question.
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