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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15942
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I purchased my home in 1997 for £80,000, my mortgage was paid

Customer Question

I purchased my home in 1997 for £80,000, my mortgage was paid off in approx 2002.
I divorced in 2010 and re mortgaged the house ( the house was in my name only) to pay off my ex wife so I could remain in the house, It was valued at £200,000 so I borrowed £100,000, I moved out in 2011 and rented the house out.
I'm now selling the house for £185,000, do I base my capital gains on my outlay of £180,000? or the original purchase price?
Many thanks
John
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.
The cost for CGT purposes will be £80,000. You simply used the property as security to enable you to borrow £100,000 to finance a cash settlement payment to your ex-wife. She had no equity in the property, you owned it 100% so you could not buy her out as she had nothing to sell.
I hope this clarifies your situation but let me know if you have any further questions.
Customer: replied 1 year ago.
thank you for your answer. so to clarify, I've got to declare I've made a profit of £105k?
Expert:  TonyTax replied 1 year ago.
That's correct but you will get relief from CGT for the period that you lived in the property and for a maximum of the last 18 months of ownership if you were not living there for any part of that period. Take a look at HS283 for more information on the main home and CGT here:
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief
TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Appreciate the advice, Thanks again.
Expert:  TonyTax replied 1 year ago.
Thanks.