• 100% Satisfaction Guarantee

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3098
Experience:  FCCA FCMA CGMA ACIS
75394688
bigduckontax is online now

# My wife and I bought a guest house in 1988 for £145,000. For

### Customer Question

My wife and I bought a guest house in 1988 for £145,000. For tax purposes we divided the house into two-thirds commercial and one-third private.
In 2008 the property was valued at £390,000.
At that point we then spent £100,000 converting the house into two flats. £45,000 went into Flat 2 which we rented out. £55,000 went into Flat 1 which we live in.
We have sold Flat 2 for £200,000.
How do we calculate the Capital Gains Tax on the sale of Flat 2?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
For the period 88 - 08 (20 years) Capital Gains Tax would apply to 2/3 of the gain 390K - 145K @ 2/3 = 163.3K. You now have an 'acquisition price of 390K. Divide by 2 add 45K, improvements, = 240K. Loss on phase 2 is 40K - 163.3K, a final gain of 123.3K. Divide by 2 gives 61.65K each subject to CGT at 18% or 28% or a combination of the two rates depending on individuals' income income including the gain in the year of sale. Each has an Annual Exempt Amount of 11.1K leaving ; worst case scenario a bill of say 14.15425K each.
Confused, you will be! I do hope that you have found my computation of some use.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3098
Experience: FCCA FCMA CGMA ACIS
Expert:  bigduckontax replied 1 year ago.

### What Customers are Saying:

• Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
• Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
• This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
• Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
• I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
• Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
• Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
• This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex

• ### Sam

#### Satisfied Customers:

7088
26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >

### Sam

#### Satisfied Customers:

7088
26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax

### bigduckontax

#### Satisfied Customers:

2333
FCCA FCMA CGMA ACIS

### TaxRobin

#### Satisfied Customers:

524
International tax

#### Satisfied Customers:

2845
FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)

### Anna

#### Satisfied Customers:

270
Great research skills, variety of work experiences, teaching experience.

### pdheslin

#### Satisfied Customers:

51
20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.