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Sam
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Category: Tax
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Bought a property jointly with husband in October 2009 for

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Bought a property jointly with husband in October 2009 for £173,000. Selling now for £225,000. Do we have a Capital Gains Tax liability. Property has been occupied by our daughter for the duration. No improvements made. Have visited by car to check out and update, decorate do minor repairs 20 times - we live 120 miles away.
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Hi

Thanks for your question.

I am Sam and I am one of the UK tax experts here on Just Answer.

Yes, you and your husband will have an initial gain of £43,000 - from which you can deduct the costs to buy and sell (such as legal fees, stamp duty, and estate agent fees etc) and had you carried out any capital improvements, then these too.

For information the costs to travel to and from the property to carry out the repairs, and the repairs themselves would be eligible to deduct from rental income only, and do not get taken into account from the capital gain position. So as no rents were collected from your daughter - then I am afraid you cannot recoup these costs.

The gain left over, after all deductions are made, then are then split 50:50 between you and your husband, which is each of your share of the gain,
The first £11,000 is exempt, as this is your exemption allowance - with any remaining gain liable to capital gains tax.

The capital gains rate is either 18% or 28% or a mix of the two, and this is determined by your usual annual income.

If you annual income is in excess of £42,475 then your capital gain rate will be at 28%, but if your income is less than £42,475, then the difference between the start of the basic rate threshold of £1001 and £42,475, will allow any unused basic rate band to create a charge at 18% on the capital gain,
For example, annual income of £34,475 - will allow a position of £8,000 unused basic rate band. So for the capital gains (once all deductions and the annual exemption allowance had been deducted) would see the first £8000 of the gain liable to 18% capital gains tax, and any remaining gain at 28%

You should both alert HMRC of the sale once it has taken place, so they can arrange to issue you self assessment tax returns to declare the gain.

Thanks

Sam


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