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CGT Tax

Customer Question

CGT Tax
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to ba able to help you with your question. Could you be so kind as to expand on your query. At the moment I have nothing to go on!
Customer: replied 1 year ago.
Hi Keith, please see Question below;

My step mum purchased a flat in 2010 for £165,000 , rented it out until April 2015.

It has been empty since then ( although she did spend some time there ) She is 62 a widow and had not worked. She plans to sell it in Feb 2016 for £220,000.

What would her CGT liability be?

When would it need to be paid?

Is it something that gets done by the solicitor at the time of sale?

Many thanks
Joseph
Expert:  bigduckontax replied 1 year ago.
No, Joseph it isn't done by the solicitor! Your step mum will have to declare it on her 15/16 self assessment tax return and pay the sum due by 31 January 2017.
Her capital gain is 220K - 165K = 55K. She has an Annual Exempt Amount of 11.1K to offset this leaving 43.9K exposed to CGT. As she lived in it she would be only liable proportionately, however for the last 18 months she is deemed to occupy even if this is not the case. She owned for say 72 months so knock off the last 18 leaves 54 so 54 / 72 say three quarters of the gain is taxable; that's 32.9K. As she lived in it she is entitled to Lettings Relief (LR) up to 40K depending upon the rentals received over the period so she might well escape liability altogether.
CGT is levied at 18% or 28% or a combination of the two rates depending on her income including the gain in the year of sale.
I do hope that you have found my reply of assistance.
Customer: replied 1 year ago.

Hi Keith,

Is there any chance you could do a broad calculation?

The rental income was £10,000 pa.

Kind regards

Joe

Expert:  bigduckontax replied 1 year ago.

Rentals exceed 40K, Joe, so full LR of 40K would eliminate any gain from CGT. The taxman goes away empty handed.

Simple, as the Meerkat on the TV advert would say!

Customer: replied 1 year ago.

Thanks Keith, good work!

Cheers

Joe

Expert:  bigduckontax replied 1 year ago.
Delighted to have been of assistance, Joe. Please be so kind as to rate me before you leave the Just Answer site.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3097
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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