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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15944
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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TonyTax, I own a leasehold flat that I am thinking of selling.

Resolved Question:

Hi TonyTax, I own a leasehold flat that I am thinking of selling. It was bought by my parents from Local Auth. with a discount. My parents never actually lived there once they bought it as my dad died and mum became ill. So it was rented out. I was on the Land reg from time it was bought as I went on the mortgage due to their age. I've never lived there. If I sell what would the CGT be. Mum died in 1999, so is it diff on valur from purchase in 1990 with or without local auth discount? or value at time of mum's death in 1999 when I guess I inherited it?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Assuming that, whilst your name was on the title deeds, your parents were the true owners of the property and that you effectively did not have an interest in the property until you inherited it from your mother, your base cost for Capital Gains Tax purposes will be the value of the property when your mother passed away.

There are two rates of CGT, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in the tax year you sell it. The first £11,100 of any gains you make in the 2015/16 tax year will be tax free. Assuming you do sell it in the 2015/16 tax year, one of the following scenarios will apply:

1 If the sum of your 2015/16 income and the net taxable gain is £42,385 or less, you will pay CGT at 18% on the whole of the net taxable gain.

2 If your income in 2015/16 alone is £42,385 or more, you will pay CGT at 28% on the whole of the net taxable gain.

3 If your income in 2015/16 is less than £42,385 and the addition of the net taxable gain takes you over £42,385, you will pay some CGT at 18% and some at 28%.

I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.

Thats confirmed my thoughts thank you, ***** ***** other question. Am I right in saying that the fact that there is a mortgage on the flat that doesn't play any part in the CGT, and CGT is paid on the difference as you have described, regardless of the mortgage?

Expert:  TonyTax replied 2 years ago.
That's correct. The mortgage doesn't play any part in the calculation of the gain.
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