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TonyTax
TonyTax, Tax Consultant
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If I bought a house in 2007. Moved out in November 2009. Moved

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If I bought a house in 2007. Moved out in November 2009. Moved back in jan 2010 for 14 months. If I sell after April 05 this year with only 18 months relief then what CGT would I be liable to pay with a salary of £45,000. Is it 40% on gross profit from nov 2009 or does having moved back in for 14 months in 2010 reset the clock to my second move out date of march 2011? When I wasn't living there my x-partner was. We bought the house together as joint remnants and were never married.
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

Can you tell me what month in 2007 you bought the property and what it cost to buy. Did you move out for the second time in March or April 2011? What is the property worth now? Will the disposal proceeds be split equally between your former partner and yourself?
Customer: replied 3 years ago.
Purchaed feb 2007 for £324,000. Those dates need revising. Moved out nov 2009. Moved back jan 2011. Moved back out march 2012. Current value £600,000. Hoping for an equal split but my x paid more for the mortgage when we lived together so it might be more like 40:60 against me.
Expert:  TonyTax replied 3 years ago.
Thanks.

Leave this with me while I do some calculations and draft my answer.
Expert:  TonyTax replied 3 years ago.

Hi again.

I've worked out the taxable gain based on your occupation record, a 50% share of the gain and the property not having been let. If you exchange contracts to sell the property after 5 April 2014 for £600,000, having paid £324,000, you will make a gain of £276,000, £138,000 for each of you and your former partner. By that time you will have owned it for 87 months of which you will have lived in it for 49 and not lived in it for 38. The following figures represent your tax position based on your record of occupation of the property, not your former partner's:

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 £106,276 (£138,000 / 87 x 67). The remaining taxable gain of £31,724 is that part of the gain when you were not living in the property that is not covered by the last 18 months of ownership (£138,000 / 87 x 20).

The annual CGT exemption for 2014/15 of £11,000 will reduce the remaining taxable gain from £31,724 to £20,724. On a salary of £45,000, all the taxable gain of £20,724 will be charged to CGT at 28% leaving you with a CGT liability of £5,803.

If you can exchange contracts to sell by 5 April 2014, you will reduce the taxable gain by £11,103 (£138,000 / 87 x 7). This is based on April 2014 being 25 months since you moved out of the property. If you sell in the current tax year, your CGT will be payable on 31 January 2015 as opposed to 31 January 2016 for a 2014/15 disposal.

I hope this helps but let me know if you have any further questions.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15882
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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