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We rented out our former home – how much CGT to pay?


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https://www.theguardian.com/money/2020/sep/07/rented-out-home-how-much-cgt-price

Found this interesting on how deluded this landlord is with regards to CGT liability, not sure if genuine or just made by story by the journalist

 

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Q We are in the process of selling our former family home which has been rented out for the past eight years. We lived there from 1987 until 2012.

The value of the house increased from the £91,500 we paid for it in 1987 to £325,000 in 2012, but has gained only £5,000 since then as we have just accepted an offer of £330,000. As there has been little appreciable gain in price during the time it was let, how is the actual gain calculated? I have assumed that we only pay capital gains tax on the £5,000.
IE

 

Edited by ubuntu
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1 hour ago, msi said:

Smells fishy

What smells fishy about this?

It seems like quite a well explained example to me of how CGT works if you have had a house that you lived in for some of the time and rented out for the rest of the time?

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Interesting comment.

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This is a salutory lesson. The tax regime is such that nobody should even think about keeping a former residence, for whatever purpose, unless:
- it has not risen much in value since purchase
- they are intending to return to it in the near future,
- if rented, the return is reasonable after all expenses, including unwarranted CGT during the rental period
- they can guarantee a local house price boom in the near future.
In this case a boom means faster than historical growth.

I would add for more than 18months (as it takes time to sell but you have 3 years before you pay CGT).

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14 minutes ago, iamnumerate said:

Interesting comment.

I would add for more than 18months (as it takes time to sell but you have 3 years before you pay CGT).

9 months thesd days free from cgt at the end not 18.

Also cgt is payable in cash of course no later than one month post sale

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  • 415 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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