Hi how should I work out the gain made on the property?
The HMRC helpsheet has some examples but I can do the calculations if you let me have the following information:1 The month and year you bought the property and what cost? Is it in joint names?2 Have you improved it? If so, what did the improvements cost?3 What is the property worth now?
I have to go out for an hour or so but I will be back this evening to do the calculations of your property gain, assuming you have provided the information I asked for.
PS I'm back now.
Hi purchased in 1983 for £56,000 spent £15,000 on conservatory 15 years ago and £50,000 on an extension 3 years ago, recently valued at £565,000 sorry for late reply many thanks Derek
Can you remember which month in 1983 you bought the property? I'll post the results of my calculations in the morning as its very late now.
Hi we moved in May 5th 1983
Hi again.I've assumed that you moved into the new house this month, February 2014, and lived in the previous one until January 2014. I've also assumed that the house you are thinking of letting is jointly owned. If you sell the old house for £565,000 you will make a gain of £444,000 (£565,000 - £56,000 - £15,000 - £50,000). The figures bellow apply to each of two joint owners:If you sell the first property in January 2016 after letting it for 24 months, by that time you will have owned it for 393 months of which you will have lived in it for 369 and let it for 24, assuming you let it this month.The gain for the period the property was your main home will be exempt from CGT as will the gain for the last 18 months of ownership. That will account for £218,611 (£222,000 / 393 x 287). The remaining gain of £3,389 will be that part of the letting period gain which will not be covered by the last 18 months of ownership (£222,000 / 393 x 6).As the property will have been both your main home and let you will be entitled to letting relief which will be the lesser of:1 £40,000,2 the sum of the main residence gain and the gain for the last 18 months of ownership of the property which will be £218,611 and3 the letting period gain of £3,389.Letting relief of £3,389 will cover the remaining gain and you should have no CGT to pay.Clearly, if the property increases in value or you keep the property for longer than another two years, the calculations will need to be revisited but you have alot of potential unused letting relief to be utilised before CGT becomes an issue. HMRC may ask for sight of the receipts and invoices for the improvement expenditure. I hope this helps but let me know if you have any further questions.
Hi many thanks for the reply that is very good news, we actually moved into our new house 14/11/13 and am only just now hopefully found a tenant for our old house. I did send this information earlier but it looks like I may of not actually sent it. If it was worth £600,000 in year 1 and £650,000 by end of year two would we still have no CGT to pay? many thanks Derek
Hi many thanks for the excellent service Derek