Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hello, I'm Keith and happy to help you with your question.
Forget about the mortgage, as far as CGT is concerned it is irrelevant. It is the 100K gain that matters.
If he occupied the house as his sole or main domestic residence he is entitled to Private Residence Relief (PRR) which relieves CGT at 100%.
If his Father was also on the deeds as an owner then the same rule regarding PRR applies to him. If, however, he did not so reside then he would be subject to CGT for 50% of the gain, 50K. After deducting the Annual Exempt Amount for 15/16 tax year of 11.1K that leaves 38.9K liable to the tax. This will be levied at 18% or 28% or a combination of the two rates depending on his Father's income included the gain in the year of sael. A worst case scenario is a tax bill of a tad under 11K [10.892K to be exact].
I do hope that I have shed some light on the position for you. If your Father merely lent him the money then, of course, he has no title and CGT does not arise.
Thank you for such a quick reply.
So the CGT does not apply to me? I thought it was because we were married that I would have to pay it?
his father only went on the mortgage as a gaurntor, he never lived in the property.
my husband also spent £30,000 on the extension so I guess it's not 100% profit, just £70,000