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Post Info TOPIC: Capital Gains Tax on FHL.
Leger


Master Book-keeper

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Capital Gains Tax on FHL.
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This is just to test how much I know (or more likely don't know), regarding CGT on property.

One of my clients has expressed an interest in selling his FHL. 

The owner is looking to reduce/eliminate CGT if he sells.  The figures are (very) rough. Bought for 100k, selling for 170k, making a capital gain of 65k after buying and selling fees.

Now lets say that he lived in it for 2 years before it became a FHL, and plans to live in it for a further year, so a total of 7 years.  Is the PRR 36 months out of 84 and if he was to (say) live in it another year 48 months out of 96?  So, based on 7 years he has a capital gain of 37.2k?  and if it was 8 years a capital gain of 32.5k, then take off the CGT allowance of 12.3k?  Not sure if a further 9 months PRR needs to be added for selling purposes or is that only if he chose not to live in it before selling?

I'm aware of the letting relief, and assume that if he didn't live in it himself at any time  there would be no PRR and he could claim 40k relief?



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Artois


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Hi John

Your thinking seems correct to me, the last 9 months are given automatically whether you live there or not, 

 

BADR might also apply



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice
Leger


Master Book-keeper

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Thanks Doug, much appreciated.



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Truemanbrown


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Leger wrote:

This is just to test how much I know (or more likely don't know), regarding CGT on property.

One of my clients has expressed an interest in selling his FHL. 

The owner is looking to reduce/eliminate CGT if he sells.  The figures are (very) rough. Bought for 100k, selling for 170k, making a capital gain of 65k after buying and selling fees.

Now lets say that he lived in it for 2 years before it became a FHL, and plans to live in it for a further year, so a total of 7 years.  Is the PRR 36 months out of 84 and if he was to (say) live in it another year 48 months out of 96?  So, based on 7 years he has a capital gain of 37.2k?  and if it was 8 years a capital gain of 32.5k, then take off the CGT allowance of 12.3k?  Not sure if a further 9 months PRR needs to be added for selling purposes or is that only if he chose not to live in it before selling?

I'm aware of the letting relief, and assume that if he didn't live in it himself at any time  there would be no PRR and he could claim 40k relief?

 Don't forget that an FHL can obtain Business Asset Disposal Relief (as well as business rollover relief and gift relief)!



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Leger


Master Book-keeper

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Truemanbrown wrote:

 Don't forget that an FHL can obtain Business Asset Disposal Relief (as well as business rollover relief and gift relief)!

 Thanks.



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
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