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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am currently a landlord with just one property which is tenanted.

Resolved Question:

I am currently a landlord with just one property which is tenanted. Later this year I wish to sell this property and would like to know what I am likely to pay in capital gains tax?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

Has the property ever been your main home during your ownership of it? If so, I will need more information but I will only ask for that if it is necessary. What did the property cost to buy and what is it worth now? Have you made any improvements to it? If so, let me have details of the work done and the cost.
Customer: replied 3 years ago.

Property was inherited. Was in poor condition and brought back to good standard for rental purposes (through an agency). Ongoing maintenance


issues are dealt with.

Expert:  TonyTax replied 3 years ago.
Thanks.

Can you tell me how much it was worth when you inherited it, the cost of any improvement work and what it is worth now please. I will then be able to calculate the gain you may make and the tax implications.
Customer: replied 3 years ago.

Thought it should have fetched approx. £200,000 but best offer in poor condition was £145,000


In total have spent approx. £23,000 on repairs.

Expert:  TonyTax replied 3 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 3 years ago.
Hi again.

Is the £145,000 what it is worth now? If so, what was the value when you inherited it? That value will be your "cost" for CGT purposes. If the £145,000 was the value when you inherited what do you expect to sell it for now?
Customer: replied 3 years ago.

Sorry, its hard to say. I estimated £200,00 when I inherited the house (in 2008).


No idea what it is currently worth - lets assume the same amount.


Do my personal circumstances make any difference? I am retired.


 

Expert:  TonyTax replied 3 years ago.

Thanks.

If the house was worth £200,000 in 2008 and you spent £23,000 on capital improvements which wasn't claimed against the rental income and you sell it for £200,000, you will have made a loss of £23,000 so there would be no CGT liability. You can claim the selling costs against any gain you may make.

The value of the property when you inherited it that you use to calculate any gain may be challenged by the tax office so you need to be sure of your figures.

The first £11,000 of any gains you make in the 2014/15 tax year will be tax free. There are two rates of CGT, 18% and 28%. The rate or combination of rates that you pay will be dependent on the level of your income in the tax year of the property disposal so one of the following will apply to you:

1 If your income in 2014/15 including the taxable gain is £41,865 or less, then all the taxable gain will be taxed at 18%.

2 If your income in 2014/15 excluding the taxable gain is more than £41,865, then all the taxable gain will be taxed at 28%.

3 If your income in 2014/15 excluding the taxable gain is less than £41,865 but more than £41,865 when you include the taxable gain then part of it will be taxed at 18% and part at 28%.

 

Take a look here for more information on property and CGT.

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

TonyTax and other Tax Specialists are ready to help you

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