How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask bigduckontax Your Own Question

bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3114
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

We have owned a property years.In 2009 we purchased

Resolved Question:

We have owned a property for 20 years.
In 2009 we purchased a second property to renovate, although not finnished we moved into it in 2013 putting our first property on sale, needing the money from the sale to finish the renovation. This property of 20 years as been empty since we moved in 2013 and we are now in a position to sell it, as far as we are aware it has been our nominated home, but have been told to confirm this to HM Revenue & Customs as there could be CGT to pay.
Is this correct and if any, how much?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

If you acquire a second property then you have two years in which to declare to HMRC which residence is to be your sole or main domestic residence for the purposes of Private Residence Relief (PRR). If this is not done then HMRC will make the decision as to which is the main residence based on the facts.

I would suggest that in the scenario set out HMRC would be perfectly correct in allocating the PRR to the new property. Thus on the sale of the old house any gain made would be subject to CGT. The value of any property for CGT purposes is deemed to rise equally with time. We all know that this is not actually the case, but that is how it works.

If you do have to pay CGT on the old house the formula is as follows. Take the net selling price. Deduct the purchase price plus buying costs plus any improvements eg installation of double glazing, central heating, extensione etc. Then take one from the other to derive a gain on disposal. Now take the total ownership time in months [A]. Take the occupation time ditto and add 18 (you are deemed to be in occupation for the last 18 months even if this is not the case) [B[. Deduct B from A [C] and the ratio of C over A is the proportion of the gain which will be subject to CGT, half each. You also both have an Annual Exempt Amount (AEA) of 11.1K to offset this gain.

CGT is levied at 18% or 28% or a combination of the two rates depending on your income including the gain in the year of sale. In view of the relatively long ownership period of the first house the amount exposed to CGT (15%) and your AEA it should not be that onerous and, remember, the gain is half each assuming that you were Joint Owners with your spouse.

Simple, as the Meerkat in the TV advert would say! I cannot tell you how much without quantative data, sorry.

I do hope that my response has been of some use in solving your CGT conundrum.

Customer: replied 1 year ago.

Hello Keith,

Thank you for your reply, after my calculation the figure I get is 16. This, I presume, is a £16,000 gain?

Do we need to still nominate or is this to late,will it make any difference?

Best regards,

William.

Expert:  bigduckontax replied 1 year ago.

Well, theoretically you ate out of time, but you never know, HMRC might still accept tyhe election. They can only say no.

If you are coming up with 16, if that is the total gain then it is split between the pair of you and is below your AEA so there will be no CGT. If it isn't and it is 16K each then your individual liability will be GBP 1672 tax, worst case assuming tax at 28%.

Customer: replied 1 year ago.

Thank you Keith, You have been a great help we are now clear on what action to take , best £38 we have spent in a long time.

Best regards,

William.

Expert:  bigduckontax replied 1 year ago.

Delighted to have been of assistance

Please be so kind as to rate me before you leave the Just Answer site.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3114
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.
Expert:  bigduckontax replied 1 year ago.
And your generous bonus.

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
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

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