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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: UK Tax
Satisfied Customers: 4720
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have a property rented out as I have been living with my

This answer was rated:

I have a property rented out as I have been living with my partner. we are splitting up I have no claim to the current property that we lived in but cannot afford to pay off the mortgage in my property , I would like to sell my house and get something smaller but cannot if I pay capital gains tax what can I do
Hello and welcome to the site. Thank you for your question.

Please advise ...

The property that is rented out .. was it your main residence at any time?
If so, how long did you live at the property before living with your partner?
For how long has the property been rented?
For how long have you owned the property?

Many thanks
Customer: replied 3 years ago.


yes it was my main residence for aprox 20 years it has been rented out for 12 years and tax paid on rental t I have owned the property for aprox 25 years it was a council propert that I rented then bought.

Janet, thank you for your reply and additional information.

Please leave it with me. I will revert to you with an answer shortly.

Many thanks

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.

Relief available

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:

- £40,000
- £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.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

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