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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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we have recently sold a property that was previously rented

Customer Question

we have recently sold a property that was previously rented out, after repaying the outstanding mortgage and a second charge to Barclays Bank the remaining money was £37,000. My husband and myself are both retired, do we have to pay any tax on the amount we received
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.

Hello and welcome to the site. Thank you for your question.

Please advise
- was the property ever your main residence or was it a second home always?

- if it was a main residence at some point, please advise for how long you lived in that property and for how long you have owned that property?

- what was your profit on sale?

Many thanks

Customer: replied 2 years ago.

No it was never my main residence. I have owned it since 2001.

The profit from the sale was £37,000

Expert:  taxadvisor.uk replied 2 years ago.

Thank you for your reply and for additional information.

Based on information provided, the whole gain would be chargeable to capital gains tax as it never was your main residence and therefore you would not be entitled to any private residence relief.

It would appear the property was jointly owned. You would both get a gains allowance against the gain of £37,000 and the balance (37,000-(2*11,000)) £15,000 would be subject to CGT at 18%, 28% or a combination of both depending on your total income inclusive of your share of the gain (15,000/2) £7,500.

If your total taxable income including your share of the gain is up to £31,865 then your CGT on the gain would be 7,500 x 18% = £1,350 per tax payer.

You should bear in mind the gain on sale of property is selling price less (buying price plus costs associated with buying and selling the property) and not what is left over after repaying any outstanding mortgage/loan on that property.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Expert:  taxadvisor.uk replied 2 years ago.

Hello

I notice you have viewed my response to your question on whether you have to pay tax on sale of a property that was previously rented out (JACUSTOMER-iuant7ht- Last Viewed on 10/13/2014 at 8:27 AM).

Just checking to see if you have any issues relating to your question that I may not have addressed. Please let me know if I can be of further assistance.

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get credited for it.

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