My husband and i are currently living in panama and renting…

HiCustomer/p>

Thanks for your response, and I do apologise, for some reason your question did not re-appear on the question forum - and I was only alerted of your question by email a few moments ago

If you sell the house within 36 months of having left this property - there will be no capital gains to pay - it is not down to whether you stop letting it or not.

But note this 36 months capital gain free relates to the last 36 months of ownership - so

If you then move in before the 36 months are passed - and make this your main home again - then let it out again - then the final 36 months of ownership becomes the exemption for private residence relief - not the period of time in between leaving and returning.

Whatever do you - there will l always be a capital gain consideration - its just a question of whether with the last 36 months being covered by private residence relief - and the private lettings relief, that allows an exemption of up to £40,000 capital gains - still leaves a capital gain liable to tax.

Let me show you an example

Property bought Dec 2000 and sold Dec 2009

Owned for 108 months

Lived there are main residence for period Dec 2000 to Dec 2003 and let out for period Dec 2003 to Dec 2006 and lived there for period Dec 2006 to Dec 2007 and let out again for period Dec 2007 to date of sale Dec 2009

Sold of a profit of £150,000

Of this profit of a total 108 months you lived there for 48 months

Private residence relief exempts 48 months plus the last 36 months of ownership - so a total of 84 months - so £150,000 x 84/108 = £116,666 is exempt from capital gains

This leaves a chargeable gain of £33334

However then you would have private lettings relief to consider

This is the lesser of

1) The amount of gain covered with private residence relief - which is £116,666

2) The amount of gain after private residence relief has been applied - which is £33334

OR

3) £40,000

As the lesser amount for private lettings relief would be the amount of gain after private lettings relief has been applied - £33334 is exempt - there is no gain to pay

You really need to look at your own figures and apply this formula - also note that you have also an annual capital gain exemption of £10,100 (and if the property is in joint names - each of you have this annual exemption) and its only if a gain exists after this - that 18% tax is due.

If you need any help with your own figures - let me know

Thanks

Sam

HI Paul and Sarah

Thanks for your response -

As you left the property in Sept 2007 if you sell by Sept 2010 - there will be no capital gains to pay - as you will be selling within 36 months - which will be covered by private residence relief.

AS you left the UK Sept 2007 - 5 full tax years will be met as follows

First full tax year April 2008 to April 2009

Second full tax year April 2009 to April 2010

Third full tax year April 2010 to April 2011

Fourth full tax year April 2011 to April 2012

Fifth full tax year April 2012 to April 2013

So as long as you remain out of the UK longer than 05/04/2013 and you sell before you return to reside in the UK - there will be no capital gains to pay.

Remember to be treated as not resident for each of these tax years - you need to remain out of the UK residing abroad, with your visits back to the UK not exceeding more than 182 days in any one tax year, or an average of more than 90 days over 4 tax years.

Just one last point - even if you sold between Sept 2010 and March 2013 - lets look at what capital gain liability there is - with the figures you have provided with a sale taking place Sept 2011

Property bought for £42,000 Sept 1993

Value at sale date Sept 2011 approx £250,000

Gain £208,000

Property owned for 216 months of which lived there for 168 months

The private residents relief is given for 168 months you lived there plus last 36 months of ownership = 204 months

Gain £208,000 x 204/216 = £196,444 Exempt with Private residence relief

Chargeable gain to consider £208,000 less exempt £196,444 =£11556

Then we consider private lettings relief

which is the lesser of

1) The amount covered by Private residence relief =£196,444

2) The amount left over after private residence relief has been applied = £11566

OR

3) £40,000

As the lesser figure is the 2) The amount left over after private residence relief has been applied - £11566 is deducted from the remaining gain of £11566

There is no capital gains to pay

AS you can have up to £40,000 worth of private lettings relief - even if the property increased in value between now and 05/04/2013 - you would have a long way to go before a capital gains liability arose

By which time if you achieve being out of the UK for more than 5 full tax years - and then sell - there is no capital gains liability as you will be exempt due to non residency.

The botXXXXX XXXXXne here - sell when you see fit - you are exempt until Sept 2010 under private residence rules

You will remain with no or little liability from Sept 2010 to 05/04/2013 as you have private residence and private lettings relief to cover any gain completely with the value at todays date

Sell after 05/04/2013 as you will then have been out of the UK for five full tax years

If you have any other questions, feel free to ask - but if you could press accept - for the work I have undertaken so far, it would be appreciated -

Thanks

Sam