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Sam
Sam, Accountant
Category: Tax
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I have recently sold a property( the only one I own) for net

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I have recently sold a property( the only one I own) for net proceeds of £178,839.It was purchased in July 1982 and cost £16,600 with acquisition costs of £ 750. It was two properties which I converted into one and carried out a number of improvements on. I have invoices covering this work which total £35,500. I left the property in 1994 to live with my wife.The property was let out for one year only on 27 October 2011 for £ 8,400 ( for which I have been taxed). I am a pensioner aged 83 with a pension of about £13,000 p.a. I would be grateful if you could give me an estimate of the capital gains tax. A.J. XXXXXXX  [email protected]

Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi Mr A J Rothwell

Thanks for your question. I am Sam and I am one of the UK tax experts here on Just Answer

Please advise
1) The date the property sold
2) The costs to sell - so legal and estate agent fees
3) The month in 1994 you moved out
4) Confirm that the property was empty between the date you moved out and 27/10/2011
5) Confirm that the property was empty between the date the letting ceased (assume this was Oct 2012) and the date the property was sold
6) Advise how the £35,500 is made up - and that none of it relates to general repairs

I can then undertake an approx. calculation for you

Thanks

Sam
Customer: replied 2 years ago.

1 3 Februa.............................................................................................................................................................................................................................................r..........y................................................................................................ ..........................................................2014.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................


2 ....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... .....................................................................................................................................................................................................................................................................................................

Expert:  Sam replied 2 years ago.
Hi

I am afraid the information has not come through - could you re-advise

Thanks

Sam
Customer: replied 2 years ago.

Just sent you the information

Customer: replied 2 years ago.

Have you received my replies ?


 


 


Alec

Customer: replied 2 years ago.
Relist: Answer came too late.
Expert:  Sam replied 2 years ago.
Hi

There is no information supplied
I have copy and pasted the reply you gave - which was
1 3 Februa.............................................................................................................................................................................................................................................r..........y................................................................................................ ..........................................................2014.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................


2 ....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... .....................................................................................................................................................................................................................................................................................................




Thanks

Sam
Expert:  Sam replied 2 years ago.
Hi

Please would you advise

1) The date the property sold
2) The costs to sell - so legal and estate agent fees
3) The month in 1994 you moved out
4) Confirm that the property was empty between the date you moved out and 27/10/2011
5) Confirm that the property was empty between the date the letting ceased (assume this was Oct 2012) and the date the property was sold
6) Advise how the £35,500 is made up - and that none of it relates to general repairs


Then I can provide you with the information you require

Thanks

Sam
Customer: replied 2 years ago.

1. date property sold 29 January 2014


2. costs to sell £4161


3. month moved out not known


4, yes


5. yes


6. the £35,000 made up of hundreds of receipts none general repairs

Expert:  Sam replied 2 years ago.
Hi

Thanks for your response

Then the capital gain position (approx. as you do not recall the month of 1994 you moved out) is
Sale prices £178,839 less purchase price, less costs to buy and sell and capital improvements £57,011 - which leaves £121,828

Then we consider the tax reliefs you lived there from July 1982 to some point in 1994 (I shall use July 1994 for ease) this allows private residence relief for 144 months PLUS the last 36 months of ownership - so a total of 180 months and you owned this property for a total of 378 months
So Gain £121,828 x 180/378 = £58,013
This is deducted from the gain -leaving £63,815
(12 months)
Then you have a year relief for private letting relief -
Private lettings relief is the lesser of
1) The amount of gain on which private residence relief is due £58,013 x 12/378 = £1841
2) The amount of gain left over after private residence relief has been applied £63,815 x 12/378 = £2025 OR
3) £40,000 x 12/378 = £1269

As the lesser figure is 3) £1269 this I used to give you credit for a year of letting.

So Gain £63,815 less £1269 = £62,546

Then you have the 2013/2014 annual exemption allowance which is £10,900 - this leaves a final gain of £51,646

As your annual income is £13,000 you have an unused basic rate band of £29,475 (£42,475 less annual income £13,000)
So the first £29,475 of the gain is charged at 18% = £5305.50
And the remaining £22,171 at 28% = £6207.88


Total capital gain £11,513.38 to pay


Of course an adjustment will be needed if you moved out before of after July 1994.

Thanks

Sam
Customer: replied 2 years ago.

Thank you very much. Just one query. The figure I gave you for proceeds of sale were for what was paid into my bank by the solicitor after he had paid the estate agent, himself and selling costs. The price paid by the purchaser was £183,000. Does this affect your answer ?

Expert:  Sam replied 2 years ago.
Hi

Yes completely - so the sale figure will need replacing with the £183,000 rather than the £178,839 I used.

Thanks

Sam
Sam, Accountant
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