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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I bought a property in 2002 in Brighton for £251,000. I lived

Resolved Question:

I bought a property in 2002 in Brighton for £251,000.
I lived in it until 2006 but kept it on vacant until 2008.
In 2008 I rented it out and have done until today.

I am thinking about selling it this year and noticed the change in the relief laws in last nights paper from the last three years to the last 18 months.

The house value is now £450,000.

Are you able to indicate to me how much my CGT would be if I sold.
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

Please advise if you intend to sell it in current tax year or post 5 Apr 2014

Many thanks
Customer: replied 3 years ago.

Post 5th april 2014

Expert:  taxadvisor.uk replied 3 years ago.
David, thank you for your prompt reply.

I will revert to you shortly with my calculations.

Many thanks
Expert:  taxadvisor.uk replied 3 years ago.
David, thank you for your patience.

Capital gain that would be chargeable to CGT would be £63,808 using gains allowance for 2014-15.

CGT rate would be 18%, 28% or a combination of both depending on your total income in the year of sale.

Here are my caluculations and also likely CGT using personal allowance for current tax year.

If the property is jointly owned then each owner would qualify for letting relief and gains allowance.

CGT calculations
sale proceeds 450,000
Cost price 251,000
Potential capital gain 199,000
Period covered as main residence 48 (2002-2005)
Period unoccupied 24 (2006-2007)
Period covered as let property 84 (2008-2014)
Total period of ownership 156 (2002 - Dec 2014)
Final 18 months relief 18
Private residence relief 84,192
Gain subject to CGT 114,808
Maximum letting relief available - lower of
Fixed amount set by HMRC per owner £40,000 40,000
Private residence relief 84,192
Gain on the part of the property that's been let 114,808
Letting relief 40,000
Gains chargeable to CGT 74,808
Gains annual allowance (£11,000 per owner) 11,000
Tax year 2014-15
Gains chargeable to CGT 74,808
Annual Gains exempt allowance 11,000
Chargeable gain 63,808
CGT calculation
If income after personal allowances is >£32,010
then CGT on gain is taxed at 28% £17,866
If income after personal allowances is less than
£32,010 then some gain will be taxed at 18%
and the balance at 28% - see example below
Assume income after allowances is £20,000
Chargeable gain taxed at 18% 12,010
Chargeable gain taxed at 28% 51,798
CGT £16,665

I hope this is helpful and answers your question.


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Expert:  taxadvisor.uk replied 3 years ago.
David, I thank you for accepting my answer.

Best wishes.
Customer: replied 3 years ago.

Very comprehensive and speddy response.


Extremely satisfactory, thank you.


I may have altered timings or figures in the near future and will not hesitate to follow the same path.


 

Expert:  taxadvisor.uk replied 3 years ago.
I thank you for your good words.

Best wishes.