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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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bought a house in April 1992 for £41k lived in it as main

Customer Question

Hi bought a house in April 1992 for £41k lived in it as main residence until April 1999 when moved in with my partner (who solely owns current main residence) Rented out property from 1999 to date, considering selling at £120,000. Is CGT applicable? I asked the question a three years ago but the market wasn’t right but now I understand there have been changes to rules as well or about to be changes this April. What would be the amount of gain I need to add to my taxable income? not used any CGT allowances. BRT. Lastly, we are getting married. Is there any benefit to waiting to sell and splitting ownership before selling or will this affect any of the allowance for pre owning as my main residence.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

Take a look at HS283 here for information on the main residence and CGT. From 6 April 2015, the gains made by non-UK residents on the disposal of UK residential property will be taxed in the UK and the government intends to withdraw the ability of those with more than one home to elect for one to be treated as their main home regardless of whether it is or not.

Unless you are married or in a civil partnership and the property you wish to sell is put into joint names whilst you are living there and it is your main residence, your partner would not qualify for main residence relief or letting relief on their share of the gain. It would also have to be let during their part-ownership of it.

As things stand, you will make a gain of £79,000 if you sell the property, less costs of buying and selling it. Assuming the property is sold by 5 April 2015, the gain for the period that you lived in it will be exempt from CGT as will the gain for the last 18 months of ownership (previously 36 months ). Therefore, the exempt gain would be £29,196 (£79,000 / 23 years x 8.5 years). The non-exempt gain is £49,804 (£79,000 / 23 years x 14.5 years).

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

1 £40,000,

2 the exempt gain of £29,196 and

3 the letting period gain of £49,804.

Letting relief of £29,196 will reduce the non-exempt gain to £20,608 and the annual CGT exemption of £11,000 will leave you with a net taxable gain of £9,608 on which you will pay CGT at 18% or 28% or a combination of the two rates depending on the level of your income in the tax year of disposal.

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

Customer: replied 2 years ago.
Hi and thanks , I am just a little confused about the reference HS283 in the first paragraph, obviously in my case the property isn't but was my main residence and I have no other main residence I own. I doubt I will sell before 5/04/15. Will the tax charge be different in my circumstances, sorry if I seem a bit stupid, but the reason for asking the question was so I can be prepared before selling.
Expert:  TonyTax replied 2 years ago.

I've never had anybody make the point you did about HS283 before. My answer has all you need to know. It was your main residence. Now it isn't. I've split the gain into taxable and non-taxable parts based on who has lived there during your ownership of it, you (non taxable period) or a tenant (taxable period).

Customer: replied 2 years ago.
Not sure if I sent the last reply ( told you a bit stupid on these things) to finish in simple lay terms will my CGT position be the same post 6/4/15.
Expert:  TonyTax replied 2 years ago.
Assuming you are not non-UK resident, you won't be affected by the rule change that will affect non-UK residents.

As for the main residence election, neither you not your partner each own more than one residence so an election is irrelevant.

Clearly, the longer you own the property and any change in its value may affect the arithmetic insofar as the calculation of the gain is concerned.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.
Thank you for you answer and patience, happy Friday :-)
Expert:  TonyTax replied 2 years ago.
Thanks. Have a good weekend.

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