Lettings relief and PPR

Hi

I need to brain storm with someone.  Client sold a house which they now need to calculate CGT on.  I am confusing myself as to which months to include that falls within lettings relief.

Basically property acquired in Dec 2000, lived in until Feb 2004 (38 months)

Rented out from Feb 2004 until May 2007 (39 months)

Moved back in May 2007 until Nov 2009 (31 months)

Rented until sold Nov 2009 until Oct 2012 (34 months)

Total ownership was 142 months.

Gain is £87,000

How do I factor in the first rented period? Is it that PPR is 105 months (ie 38+31+36 (deemed) = 105/142 

and lettings relief is based on 39+34 = 73/142.  I am not clear how the first let period is taken into account when individual moves back home.

The upshot is no CGT will be due (either eroded fully by PPR (if I ignore the first let period - which seems wrong) or by a mix of PPR and lettings relief.  I am trying to clarify the logic.

 

Thanks in advance

 

Short description: 
clarification
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Comments

Euan MacLennan's picture

PPR and lettings relief

Euan MacLennan |

No - the main residence relief is 103/142 of the gain of £87,000, being 38+31+36-2 because the last 36 months of deemed residence overlaps with 2 months of actual residence.

No - lettings relief does not apply to any letting period in the last 36 months of deemed residence, so the lettings relief is 39/142 of the gain, being the first letting period.

BKD's picture

The figures could be different

BKD |

Depending on where the owner lived during the first letting period, main residence relief could be 139/142 of the gain, with only 3/142 letting relief.

Steve Kesby's picture

@BKD

Steve Kesby |

If you'd said, "depending on where he lived during the first letting period, and why", the whole gain might be covered by OMR. :)

Lettings relief and PPR

Martin B |

Flagging

Agree with BKD on this as

TaxSpud |

Agree with BKD on this as they returned to the PPR after a period of absence could be deemed occupation eg working overseas

Steve Kesby's picture

I agree with Martin B

Steve Kesby |

This thread hasn't got quite as much vim as many of the other threads on the subject.

@TaxSpud - BKD's referring to the 3 years for any reason (other than having another PPR) deemed occupation. Working overseas buys you any length of absence, as would living in job-related accommodation. Other employment-related absences will earn 4 years.

just to clarify

lja20 |

The first absence was due to an extended period of travelling (not by virtue of employment in any case), or by moving into another owned property. Sorry I should have made that clearer in my opening post.  Thank you all for the debate on this.

I shall be ignoring the first let period in the calculation.

Have a good evening.

ACDWebb's picture

as BKD says

ACDWebb |

lja20 wrote:

The first absence was due to an extended period of travelling (not by virtue of employment in any case), or by moving into another owned property. Sorry I should have made that clearer in my opening post.  Thank you all for the debate on this.

I shall be ignoring the first let period in the calculation.

Have a good evening.

I think as BKD says you can only ignore 36 of the first 39 month let period - 36 mths for any absence with use as OMR before and after and no other OMR in the gap.

The final let is covered by final 36 mths in any event, which leaves 3 mths from the first let period for letting relief, and probably no chargeable gain.