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 TonyTax Your Own Question

TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15880
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
13905389
Type Your Tax Question Here...
TonyTax is online now

My wife and i brought a small terrace house in 1976 for £5100,

Resolved Question:

my wife and i brought a small terrace house in 1976 for £5100, did some improvements, approx £1000 and installed my parents, charged no rent, they were on low incomes and received full council tax relief. We assumed they could be classified as dependent relatives. the last surviving relative died in 1996 since when the property has been let on short term contracts; all income properly declared to hmrc on self assessment returns. the property was vacated in dec.2014. the property was sold on 5th Aug this year for £97,000.Is there likely to be a capital gains situation?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

Can you tell me how much the property was worth on 31 March 1982 please. Which month in 1996 did the last surviving relative pass away?
Customer: replied 1 year ago.

Hi,

At this stage I can only estimate the value of the property at £13,000(Nationwide house price index calculator) A proper valuation may take a while.The exact date of the surviving spouse passed away was 26th Feb. 1997.

Regards ***** *****

Expert:  TonyTax replied 1 year ago.
Thanks.

Leave this with me while I draft my answer. It will take a while so please bear with me.
Expert:  TonyTax replied 1 year ago.
Hi again.

Provided your parents met the criteria here, you will qualify for main residence relief for the period that they lived there and for letting relief as the property was also let as well as having been their main home.Take a look at HS283 here for more information. As Capital Gains Tax was rebased to 31 March 1982, only the period thereafter is taken into account. When the property was sold you made a gain of £84,000 (£97,000 - £13,000), £42,000 for each of yourself and your wife. You owned it for 400 months (from 31/3/82). It was occupied by dependent relatives for 179 months, it was let for 214 months and it was empty for 7 months. The following figures apply to each of you:

The gain for the period was your parents' home will be exempt as will the gain for the last 18 months of ownership. That accounts for £20,685 (£42,000 / 400 months x 197 months). That leaves £21,315 (£42,000 / 40 months x 203 months).

As the property was the home of dependent relatives and it was let, letting relief is due. This will be the lesser of:

1 £40,000,
2 £20,685 and
3 £21,315.

Letting relief of £20,685 will reduce the remaining gain of £21,315 to £630 and the annual CGT exemption of £11,100 will cover the balance so no CGT will be payable.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15880
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you

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.
 
 
 

Related Tax Questions