2020 CGT changes and the implications of no PPR relief?

by Readers Question

19:14 PM, 16th May 2019
About 2 years ago

2020 CGT changes and the implications of no PPR relief?

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2020 CGT changes and the implications of no PPR relief?

We bought the property in 1988 for 79K. its current value is 500 – 550K. In 2011 I became ill and could no longer work so we rented out the property in Wokingham as it was cheaper to live on one salary in the north where we had bought another property.

Question: Do we sell the property in the south to avoid the burden of a large tax bill before April 2020 or do I need to move into it to avoid the tax bill prior to selling.

Our principle private residence has been in Yorkshire whilst we’ve had tenants in most of the time in the Wokingham property with the odd gap or 2 in tenancy when tenants moved out.

Many thanks


Editors Note:

From April 2020, lettings relief will be reformed so that it is only available to those who are in shared occupancy with a tenant. The final period exemption will be reduced to nine months.

>> https://www.gov.uk/government/publications/private-residence-relief-budget-2018-brief

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Neil Patterson

19:18 PM, 16th May 2019
About 2 years ago

Hi Veena,

Please see the HMRC CGT calculator >> https://www.gov.uk/tax-sell-property/work-out-your-gain


7:45 AM, 18th May 2019
About 2 years ago

I think the maximum you can get through lettings relief is £40,000. Your baseline is the value of the property when you moved out (2011) and the gain is the difference between that (not when you bought it) and its value now. The most you can deduct is the £40,000 and the personal allowances (currently £12000 each) plus costs of sale and purchase and any capital expenditure not claimed through income tax. The only part that will be affected is the £40,000 which at 40% would be £16,000 more tax payable. It doesn't apply to the whole gain in any case.


17:58 PM, 20th May 2019
About 2 years ago

As mentioned by Puzzler. Just had a similar conversation with a client looking to sell after renting out for 4.5 years. If you are really unsure, seek out a good local accountant who deals with property and taxes for best advice.

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