Capital Gains on rental property

C

CLD

Guest
Apologies if this query is covered in another thread. I want to know if CGT is payable from the time of buying house or from the time the house ceased to be primary residenct and became a rented house, the details are:-

Bought House (1) June 2002 - lived in it as primary residence until Mar 2005 whereupon House (2) became primary residence and House (1) became a rented property. Property has been rented since March 2005 and i wish to sell immediately.

Thanks for any help.
 
CLD said:
Bought House (1) June 2002 - lived in it as primary residence until Mar 2005 whereupon House (2) became primary residence and House (1) became a rented property.
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Since you rented a property originally bought as an owner occupier PPR within 5 years of purchase you were liable for a clawback of stamp duty at that time. If this has not been discharged then it is still due. The amount owed is the difference in between the SD that an investor would have paid on the purchase at the time and what you actually paid (possibly 0%).
Property has been rented since March 2005 and i wish to sell immediately.
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The first 12 months of rental after vacation as your PPR are exempt from CGT so if you sold it today then your CGT liability would be as follows:

Period of ownership: June 2002 - June 2006 = 4 years 1 month or 49 months
Period of rental: March 2005 - June 2006 = 16 months, 12 months of which are exempt so 4 months of which are assessable

Therefore (4/49) * 100 = c. 8.16% of any resale gain would be assessable for CGT calculated in the normal way.

Disclaimer: I am not a tax expert so please double check the details above with an independent, professional tax advisor before making any decisions on them.
 
Thanks Clubman - thats very helpful. My next query is as House (1) was a new house i did not pay any stamp duty, would i now be liable for stamp duty as i did not live in it for 5 years. Thanks.
 
You will be liable for stamp duty at the rate applicable to investors at the time of purchase, payable as at the date the property was first rented out, so there may be interest payable.

Again, if in doubt, seek professional tax advice,
 
Both I and CCOVICH have already dealt with the SD clawback issue above, however...
CLD said:
My next query is as House (1) was a new house i did not pay any stamp duty, would i now be liable for stamp duty as i did not live in it for 5 years. Thanks.
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That is not what you said above:
CLD said:
Bought House (1) June 2002 - lived in it as primary residence until Mar 2005 whereupon House (2) became primary residence and House (1) became a rented property. Property has been rented since March 2005 and i wish to sell immediately.
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According to this you did live in it in the last 5 years (i.e. up to February 2005)! Either way this is irrelevant if the property bought as a PPR was rented out within 5 years of purchase in which case the SD clawback applies as explained above.
 
The first 12 months of rental after vacation as your PPR are exempt from CGT
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I don't suppose anyone has a link detailing this 12 month exemption?
 
Thanks Clubman - as CCOVICH's reply was only posted today i have just seen it and i meant i have not lived in the property for the full 5 years.
 
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