Taxing times

By THIS IS MONEY
Updated:

 

I have a property that I purchased in 1996, which has been let since March 2000. I now live with my partner. The property has increased in value and I am thinking of selling. I have heard that if you sell within three years of first letting your property you are exempt from paying CGT. Also I have heard that I would not have to pay CGT on the first £40K profit made regardless of when the property is sold. Is this true? I'm on basic rate tax and in full time work. NH, Herts.

Maurice Fitzpatrick from accountants Chantrey Vellacott says: In effect the three years figure is correct. Provided you have occupied the property as your principal private residence for any period during your period of ownership, the last three years is always regarded for CGT purposes as part of the tax exempt period.

As for the £40,000 rule, it is a little known twist that if you let a property that has at some time been your principal private residence and you sell and end up with a gain, the first £40,000 of that gain is free of CGT. In your case this is academic because provided you sell within three years of moving out (not of letting starting) you will face no CGT anyway.

Most watched Money videos