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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15950
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have owned (jointly with my wife) a buy to let property which

Resolved Question:

I have owned (jointly with my wife) a buy to let property which is rented out to University students. The value has risen from £200000 in 2002 to £350000 now. How do I calculate any CGT? As far as I know we have not had any CGT claims in the last 13 years so have not used any CGT allowances.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Has the property ever been your main home?
Customer: replied 2 years ago.

no - always rented

Expert:  TonyTax replied 2 years ago.
Thanks.

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

thank you. You have not asked about our tax position. does that matter?

Expert:  TonyTax replied 2 years ago.
The way I construct my answers will make the actual CGT calculation easy for you but if after looking at my answer, you need me to work it out I can do that for you.
Customer: replied 2 years ago.

ok

Expert:  TonyTax replied 2 years ago.
Hi again.

A gain of £150,000 will be divided equally between your wife and yourself unless you own the property in other than 50:50 shares. So, that's £75,000 each. You can reduce the gain by the purchase and selling costs (legal fees, stamp duty, survey fees, selling agent fees). The following will apply to each of you and your wife:

Assuming you sell the property in the current tax year, the first £11,100 of your £75,000 gain will be exempt from CGT leaving a net taxable gain of £63,900. Unused CGT exemptions cannot be carried forward unfortunately.

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 the property. If the sale occurs in 2015/16, one of the following scenarios will apply:

1 If the sum of your income and the net taxable gain is £42,385 or less in 2015/16, then all the taxable gain will be charged to CGT at 18%.

2 If your income alone is £42,385 or more in 2015/16, then all the taxable gain will be charged to CGT at 28%.

3 If your income alone is less than £42,385 in 2015/16 but greater than £42,385 when the net taxable gain is added, then part of the net taxable gain will be charged to CGT at 18% and part at 28%.

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