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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I bought a property for 195 pounds in May 2012. I have been

Customer Question

I bought a property for 195 pounds in May 2012. I have been renting it out since then.I want to sell it, completing in 3 months time How much is my capital gains liability?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

Do you mean you paid £195,000 for the property? If you want me to work out your tax position, I will need to know what you are selling it for. Is the property a residence as opposed to a commercial property?

Customer: replied 2 years ago.

I'm selling it for 270,000 pounds sterling. It is a residential property. I paid 195,000 pounds sterling to purchase the property in April 2012. (.I have rented out the property for 21 months since I purchased it. The property was empty January to March 2013.)

Linda.

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 2 years ago.

Hi again.

My calculations are based on the property not having been your main home or let as a furnished holiday let.

If you sell the property for £270,000 having paid £195,000 for it, you will make a gain of £75,000. You can take account of the costs of buying and selling the property in your calculation of the gain (legal fees, survey fees, stamp duty, selling agent fees etc). Assuming it is owned solely by you, the first £11,000 of the gain will be tax free due to the annual Capital Gains Tax exemption leaving you with a net taxable gain of £64,000.

There are two rates of Capital Gains Tax, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the sum of your income and the net taxable gain in the tax year you make the gain. Assuming the property is sold in the current tax year, 2014/15, one of the following scenarios will apply to you:

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

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

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

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