Letting Relief

Where there is a gain / profit on the sale of your house/flat/ bungalow, which is your principal private residence and any part of it was let out as a residence at any time during the period it was owned by you, then the gain on the part you let out is assessable to capital gains tax. However, there is a deduction available of possibly up to £40,000 from that gain. This deduction can be claimed where either a part or even all of the dwelling has been let out as a residential letting. In addition you do not need to have re-occupied the house again after the period that you let it.

Look out for certain situations such as where you take in a lodger who generally shares the living accommodation and meals with you because in that case you have not stopped occupying or given up any part of your house as your private residence anyway. So, you should be eligible to full exemption from capital gains tax when you sell the property.

Where the property is jointly owned then each person is entitled to their own amount of letting relief of up to a possible £40,000 each.