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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15950
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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hello experts. We have a property jointly owned to sell

Resolved Question:

hello experts.
We have a property jointly owned to sell and these are the details and like to know what CGT would apply in our case
Purchase price: £33,000 in 1983.
Current value: ~£280,000
Existing mortgage amount: £150,000 (interest only BTL mortgage)
The house was our main residence for 20 years until 2003. We have re-mortgaged several times and have re-mortgaged for a number of years .
Current rental income is £1000pcm less 10% agency fees.
We have spent on a few one-off improvements e.g. new kitchen (£10k), central heating installation, new carpets etc but all of this was a while ago and probably don’t have receipts.
We are both basic rate tax payers.
If you need any more info let me know.
many thanks in anticipation .
jag (*****@******.***)
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

Could you let me know the following please:

1 The month in 1983 you bought the property. Have you both lived in it at some point during your ownership of it?

2 The month in 2003 you moved out. Was it let immediately? Has it been let or available to let since it was first let?
Customer: replied 3 years ago.

hi tony

1. august 1983 - we have lived there all time with family for 20 years

2. august 2003 - its been let since then till now

Expert:  TonyTax replied 3 years ago.
Thanks.

Leave this with me while I draft my answer.
Customer: replied 3 years ago.

tony - hi any idea how long and do I stay logged in here ?

many thanks

Expert:  TonyTax replied 3 years ago.
You don't have to stay logged in. You will get an email when I have posted my answer as you will for this post.

My answers are very detailed so it will take about 15 to 20 minutes to do the sums, draft the answer and check it before I post it.
Customer: replied 3 years ago.

ok wait for your response

Expert:  TonyTax replied 3 years ago.

Hi again.

If you sell the property for £280,000 having bought it for £33,000, you will make a gain of £247,000. Assuming you sell it in December 2014, by that time you will have owned it for 377 months of which you will have lived in it for 240 and let it for 137. I've left out the £10,000 for improvements from my calculations as you don't have receipts and as you will see further on in this answer, you don't need to claim it. The following figures are for each of you individually:

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 accounts for £84,517 (£123,500 / 377 months x 258 months). The remaining gain of £38,983 is that part of the letting period gain which is not covered by the last 18 months of ownership (£123,500 / 377 x 119).

As the property was both your main home and it was let you will be entitled to letting relief which will be the lesser of:

1 £40,000,

2 the sum of the main residence period gain and the gain for the last 18 months of ownership of the property which is £84,517 and

3 the letting period gain of £38,983.

Letting relief of £38,983 will reduce the remaining gain of £38,983 to £0 and you should have no Capital Gains Tax to pay.

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

Customer: replied 3 years ago.

Hi Tony,

Where does the figure of £123,500 come from in your calculation? Should this not be based on a gain of £247,000?

Many thanks

Expert:  TonyTax replied 3 years ago.
Take a look a the highlighted text from the opening paragraph of my previous post here:

If you sell the property for £280,000 having bought it for £33,000, you will make a gain of £247,000. Assuming you sell it in December 2014, by that time you will have owned it for 377 months of which you will have lived in it for 240 and let it for 137. I've left out the £10,000 for improvements from my calculations as you don't have receipts and as you will see further on in this answer, you don't need to claim it. The following figures are for each of you individually:
TonyTax and other Tax Specialists are ready to help you
Expert:  TonyTax replied 3 years ago.
A bit missed off my last post:

The gain is divided between the number of part owners and I have assumed that the property is owned by two individuals equally.
TonyTax and other Tax Specialists are ready to help you
Expert:  TonyTax replied 3 years ago.
You appear to have paid two fees. You should contact just answer if that was not your intention to get one oif the fees you have paid refunded.
Customer: replied 3 years ago.

hI tony ,


 


are both payments to you ? and how much ?


 


ta for letting me know


 


jag

Expert:  TonyTax replied 3 years ago.
I don't have any influence over payments I'm afraid. My just answer account has been credited with two payments, each one $20.97. That's 50% of what the gross fee is as just answer get half of the amount you pay and I get half. All you need to do is to contact just answer and have them check your account and to refund one of the fees.
Customer: replied 3 years ago.

tony


 


many thanks

Expert:  TonyTax replied 3 years ago.
No problem.

Please ignore any emails to respond to this post. If you respond I have to respond again. If I don't I respond I cannot answer other questions.