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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I brought a flat (my first and only property) in 2000 £86,000,

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I brought a flat (my first and only property) in 2000 £86,000, and lived there till 2008 when I had to rent it out due to going off shore with work. When I returned in 2010 I moved into a house with my partner (She has the mortgage in her name only) and have lived there since then.
I have just sold the flat, for £143,000 but I am unsure as to what I am due to settle on Capital gains.
I know this has no bearings on the Capital gains, but I remortgaged the property in 2006 I think for £109K. I think the gain is still worked out on the original Purchase Price (unfortunatey)
Also, One of my tenants trashed the flat in 2011, which I had to invest around £13K of my own savings into restoring it to a rentable state, for which the ongoing Loss is still around £7K as there have been other maintenance bills and repairs since then etc. Am I able to claim any of this back in regards ***** ***** Gains?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

Can you tell me where you went to work and where you lived during that time please. Were you sent abroad by your employer or were you self-employed? Did you pay UK tax during the time you worked offshore? Can you tell me the month in 2000 you bought the property and the month it was first let in 2008? Is the property still let?

Customer: replied 1 year ago.

Hi,

Seems I was a bit off... I bought it in Nov 2002 for £87,500 (good Start). I moved to Romania (by my Employeer) in Oct 2008, but the company sorted out the tax equalisation. Also E&Y sorted out my tax returns including the rental income on the Flat. Which I did have to pay for... so I am guessing yes.

I moved back to the UK "Officially" at the end of Aug 2010, although I was actually working in the UK from April full-time. But my contract remained "Overseas Assignment" until Aug.

Since then I have lived with my partner, but I haven't been on the mortgage for the 2 houses we have subsequently lived in.

I have sold the property to another investor still rented. I completed on the property yesterday.

Expert:  TonyTax replied 1 year ago.
Thanks.

Leave this with me while I draft my answer. It will take a while.
Customer: replied 1 year ago.

Sure... can you look into whether I can off set anothing from the loss on the flat in terms of the amount invested as well? As at the moment I am unlikely to recoup that amount within the last financial year

Expert:  TonyTax replied 1 year ago.

OK. When did the letting cease?

Customer: replied 1 year ago.

It ceased yesterday, as this was when I sold the property with the Tenants still there. passed onto the new investor.

Expert:  TonyTax replied 1 year ago.
Thanks.
Expert:  TonyTax replied 1 year ago.
Hi again.

You should refer to HS283 as part of this answer.

Had you returned to live in the property before you sold it, you could have got exemption from CGT for the period you lived and worked abroad under the "absence relief" rules as well as for the period you lived in it. That's assuming you didn't buy a home abroad.

As far as the expenses are concerned, you can only add the cost of improvements to the cost of the property. Repair costs are only deductible from rental income.

All is not lost however.

You made a gain of £55,500 when you sold the property (£143,000 - £87,500). You can reduce that further by deducting legal fees, survey fees, stamp duty, selling agent fees etc. You owned the property for 150 months of which you lived in it for 72 and let it for 78.

The gain for the period that you occupied the property will be exempt from CGT as will the gain for the last 18 months of ownership. That accounts for £33,300 (£55,500 / 150 x 90). The balance of the gain of £22,200 would normally be taxable but it will be covered by letting relief of £22,200 (the lesser of £40,000, £33,300 and £22,200). There will be no CGT to pay.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15758
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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