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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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, I have a house to sell. I bought it for £115,000 in

Customer Question

Hi,
I have a house to sell. I bought it for £115,000 in the year 2000. I moved out a year ago and it is rented. If I sell the house will I pay capital gains tax, if so how much? If I moved back in to the house, how long would I need to live in the house for it to be my main residence before I sold and not have to pay capital gains tax.
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts :

Hello my name is ***** ***** I will help you with this.

Alex Watts :

If it was not your main residence then yes you will pay SOME capital gains tax.

Alex Watts :

You have to live in it for 3 years before you do not pay any tax.

Alex Watts :

So if you moved out a year go you are entitled to 2/3rds reduction on any capital gains tax payable.

Alex Watts :

So whatever the gain is you take 1/3rd of that and this is your gain

Alex Watts :

You are allowed £11,000 tax free gain.

Alex Watts :

Then you pay tax on the balance.

Alex Watts :

Can I clarify anything for you about this today please?

Ash and 5 other Law Specialists are ready to help you
Customer: replied 2 years ago.
Can you clarify if I bought for 115,000, I sold for 270,000, I have an outstanding mortgage for 135,000. I sell after not living in the house for 2 years. How much capital gains tax do I have to pay?
Is it based on equity or purely difference between bought and sold?
Thanks
Expert:  Ash replied 2 years ago.
how come the mortgage is bigger than the value of the house?
Customer: replied 2 years ago.
The house was purchased for 115,000 but I increased the mortgage due to works on the house. It was an interest only mortgage for a long time. So the outstanding mortgage remaining is 135,000
Customer: replied 2 years ago.
When I separated from my wife I bought her share and lived in Spain due to work. It is my only house in the UK but I have rented it out.
Expert:  Ash replied 2 years ago.
£270,000 less mortgage of £135,000 means CGT on £135,000
You are allowed £11,000 tax free.
Alex
Customer: replied 2 years ago.

But I did have to get a loan of £25,000 from a family member in order to pay my ex-wife her share. Would this be taken in to consideration?

Expert:  Ash replied 2 years ago.
No......
Alex