CGT on rental flat

In message of Mon, 26 Jun 2006, writes

It will never be 'totally CGT-exempt' unless the rules/laws change in the future!

Whether you end up actually paying any CGT is another matter and depends on how all the figures pan out and what reliefs you can claim when the property is sold (or becomes a chargeable event).

DF

It already is (not "exempt" as such, obviously, bearing in mind DF's comment, but there would be no CGT payable were you to sell it now), unless your gain is seriously huge. So there is no need to move in just in order to reduce your putative CGT bill.

Having used it as a home for 7 years and rented it out for 4, were you to sell it now, then you would qualify for 10 years' Private Residence Relief (because the last 36 months always qualify for this unless the house was never used as your home: 7 years actual plus 3 years extra) plus 1 year's Letting Relief.

The LR is capped at the level of PRR and also at £40k, so unless the indexed gain exceeds £440k, no CGT would be payable, even without making use of Taper Relief or your Annual Exempt Amount.

If you waited 3 years, you'd get 10 years PRR and 4 years LR and the gain would need to exceed £140k before LR outgrew its cap.

After 3+N years, the gain would need to exceed £10k * (10+N) before there would be any danger of CGT being payable.