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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4203
Experience:  FCCA FCMA CGMA ACIS
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I am married and have lived in my marital home which I jointly

Customer Question

I am married and have lived in my marital home which I jointly own with my husband since 1992. My marital home was purchased for £110,000 but is now valued at £600,000. However, I also jointly own 50% of a flat which I purchased with my sister who is single in 1988 for £40,800. The flat is now estimated to be worth £235,000 in total. My sister has lived there on her own since 1992. I have never charged her any rent during the last 23 years. If we sold the flat, can you tell me what my position is with regard to the amount I would incur with any capital gains tax please on my 50% of the gain?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. You would be liable for Capital Gains Tax (CGT) on 50% of the gain made on the disposal of the flat you jointly own with your sister. The gain is calculated from the difference between the acquisition and the disposal price. The latter is the net disposal price ie after deduction of selling costs eg agents' fees, solicitors' fees, advertising etc. The acquisition price is the purchase price plus purchase costs plus any improvements eg installation of double glazing, central heating, extension etc, but not routine maintenance. From your question the gain is 235K - 40K = 195K / 2 = 97.5K. You do have an Annual Exempt Amount of 11.1K to offset this leaving some 86.4K exposed to CGT. This will be taxed at 18% or 28% or a combination of the two rates depending on your income including the gain in the year of sale; worst case scenario is a tax bill of say 24.2K. I do hope that I have been of assistance with my answer.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your excellent support.