Capital Gains Tax (Taxation)-FS Flashcards
(9 cards)
What triggers a liability for Capital Gains Tax (CGT)?
A CGT liability arises when an individual disposes of a chargeable asset that has increased in value, resulting in a chargeable gain.
How is a chargeable gain calculated for CGT purposes?
It is the increase in value of a chargeable asset between acquisition and disposal.
What is the tax year for Capital Gains Tax purposes?
It runs from 6 April in one year to 5 April in the following year.
What is the Principal Private Dwelling House Exemption?
A relief from CGT which exempts gains made on a property used as the seller’s main residence during ownership.
Can an individual own more than one residence and still benefit from CGT exemption?
Yes. The individual may nominate one property as their main residence for CGT purposes.
How long does an individual have to nominate a principal private residence for CGT relief?
They have two years from acquiring a new residence to make the nomination.
On what basis should someone choose which property to nominate as their main residence for CGT?
Generally, they should nominate the property likely to generate the largest gain upon disposal.
Will CGT be payable if the entire period of ownership was spent living in the property as a main residence?
No. Full exemption under the Principal Private Residence Relief applies.
Does the property’s sale price affect CGT liability if it qualifies as a principal private residence?
No. The exemption applies regardless of value, as long as it was the individual’s main residence throughout.
