Another CGT house sale question!

[spinal_tap]

I am just seeking clarification and have already searched the countless other threads for an answer (I notice Clubman and ubiquitous are regular posters on it!!). Anyway, can't find an answer relevant to my situation, so apols if it has been answered already.

Purchased a house in Feb 2002 secondhand as FTBs, and Stamp Duty was paid at the time.

Lived there until January 07, when it was then rented for just over 6 months (and therefore was no longer our PPR).

Because of a change in circumstances, we are now selling that property.

Am I right in saying there will be no CGT payable on the transaction, as Revenue accept it as being the PPR for 12 months after moving out, or is there a liability there?

Thanks

 

[Nige]

There will be no CGT if it is sold before January 2008.

There may be a stamp duty clawback though as you would have paid a reduced rate as FTBs and then you let the property within five years.

 

[ClubMan]

Purchased a house in Feb 2002 secondhand as FTBs, and Stamp Duty was paid at the time.

Lived there until January 07, when it was then rented for just over 6 months (and therefore was no longer our PPR).

Presumably the SD clawback applied here but since you presumably as non FTBs you paid the same SD that an investor would have paid on the purchase so there was no actual difference to be clawed back?

Am I right in saying there will be no CGT payable on the transaction, as Revenue accept it as being the PPR for 12 months after moving out, or is there a liability there?

Once you dispose of it before January 2008 there should be no CGT liability as far as I can see based on the information posted.

Post crossed with Nige's. And I now see that you were FTBs and not non FTBs so some SD liability may be outstanding after all under the clawback.

 

[spinal_tap]

Thanks for replies.

Hadn't even considered the SD clawback ... thought once we had paid, that was it.

Would I be right in saying so that in 2002, we paid 3% as FTBs, while non-FTB and investors paid 4%.
Therefore is it 4% of purchase price - 3% of purchase price = SD clawback?

Also, must the sale COMPLETE before January or get contracts signed before January to avoid CGT?

And, if there was a delay with sale, and it didn't complete until, say, February, what sort of liability for CGT would we have then and how would you calculate?

 

[ClubMan]

Would I be right in saying so that in 2002, we paid 3% as FTBs, while non-FTB and investors paid 4%.
Therefore is it 4% of purchase price - 3% of purchase price = SD clawback?

If those are the relevant SD rates (I've no idea what the rates were in 2002) then this is the gist of the clawback alright.

Also, must the sale COMPLETE before January or get contracts signed before January to avoid CGT?

I think the sale must close before the 12 months is up - not just contracts agreed - for the sale to be exempt from CGT. However even then only a small portion of any resale gain will be assessable for CGT. For example if you only disposed of it after 15 months after vacating it having owned it for (say) a total of 75 months then only the additional 3 months over the year are assessable for CGT. This means that 3/75 = 4% of any resale gain is assessable for CGT at 20%. (Figures are merely illustrative and may not be 100% correct!).

 

[spinal_tap]

Thanks for that.

 

[Butter]

If you bought in Feb 2002 and lived there until Jan 2007 you are only a month short of the five year cut-off for paying the extra stamp duty. Did you actually receive rent in Jan 2007? If you didn't then you should be ok. If you had waited one month more to rent it out then you wouldn't have any stamp duty liability as far as I understand it.