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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15758
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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How to declare the sale of a residential property privately

Customer Question

How to declare the sale of a residential property privately owned that was rented briefly
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. If you let me have the following information I'll do some calculations: 1 The month and year you bought the property and what it cost to buy. 2 The month and year you moved out assuming you lived in it and when it was first let. Did you ever move back in? What is the history of the occupation of the property? 3 When was the property sold and what did it fetch?
Customer: replied 1 year ago.
1)Brought in 2005 at £210k, with a £21k deposit2) October 2011 moved out. Rented to students from Nov 1st 2011 to 31st March 2012.
Moved back for a month, then rented to a family from May 2012 until The end of March 2014. I declared all this income. The property was then empty from then on, apart from myself living there back and forth until the property sold at the end of Jan 20153) sold in the last week of January 2015 at £217,500
Expert:  TonyTax replied 1 year ago.
Thanks.
Why was there an increase of just £7,500 in 10 years?
Customer: replied 1 year ago.
Well, we went into try and sell it at £250k and no one was biting, so slowly the property decreased and decreased. I got a bit of a raw deal as my management company allowed the tenants to trash the house and leave with their full deposit and no forwarding address. He refused to admit fault even with photo evidence. It just got exhausting. I then spent roughtly £4/5k, replacing carpets and reprinting all the walls which was done only 2 years previous. It was on the market from Jan 2014, but then tenants moved in March. Kept getting offers who then pulled out. About 4 times. I was desperate to sell the house as I needed to buy somewhere closer to work.I was told that I brought at £210k in 2005, during the recession the property value most likely dropped to £165/170k, so in the current market £217, 500 was not unexpected, even though the estate agents initially valued it at £250k back in Jan 2014
Customer: replied 1 year ago.
There has been no rental income in the last financial year. I have another commercial property I rent out jointly too, but that has not affect on this property.
Expert:  TonyTax replied 1 year ago.
Thanks.
You don't have a taxable gain as the CGT exemption for 2014/15 was £11,000 and you only made £7,500. I will work out the main residence and letting relief and then tell you what to put in each of the relevant boxes in the CG pages.
Customer: replied 1 year ago.
Thank you
Expert:  TonyTax replied 1 year ago.
Which month in 2005 was it bought?
Customer: replied 1 year ago.
October
Expert:  TonyTax replied 1 year ago.
Thanks.
Expert:  TonyTax replied 1 year ago.
Total period of ownership: 112 months
Total period of occupation by you: 74 months
Total period of letting: 28 months
Total period of vacant status: 10 months
Gain: £7,500 (£217,500 - £210,000)
Exempt gain: £6,161 (£7,500 / 112 x 92 (74 + 18)
Letting period gain: £1,339 (£7,500 / 112 x 20 (28 - 8)
Vacant period gain: £0 (10 - 10)
Total non-exempt gain: £1,339 (£7,500 - £1,339)
Letting relief: £1,339 (lesser of £40,000, £6,161 and £1,339)
Taxable gain £0
Here are the SA108 pages and the notes:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/420000/sa108-2015.pdf
Complete the boxes as follows using the HMRC capital gains worksheet on the HMRC site where you complete your tax return:
Box 3: £7,500, Box 30: 1, Box 31: £217,500, Box 32: £210,000 (plus legal fees for buying and selling, stamp duty, selling agent fees, disbursements though you don't need any of these as there is no tax to pay)
Box 33: £7,500, Box 35: LET (see page CGN 3 in the notes), Box 37: Main Residence Relief £6,161, Letting Relief £1,339
Take a look here for information on the main residence and CGT:
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief
I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Brilliant thanks. So I have to fill in the capital gains part of the return?
Expert:  TonyTax replied 1 year ago.
Yes, you do.
The box 37 entry you need to be careful with. The data entry screen has a limit of 240 characters and won't accept some characters. Click on the "?" to see the ones you cannot use.
Customer: replied 1 year ago.
Ok. I am just try to fill it in. I was asked if I want to use the capital gains work sheet
Expert:  TonyTax replied 1 year ago.
You should use it.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15758
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Ok. Thank you. I shall work through this!
Expert:  TonyTax replied 1 year ago.
Let me know if you have any problems.
Customer: replied 1 year ago.
Hi Tony. I can't find a format of the CG1 that allows me to write directly into it. Can I had write it, scan it and attach it? Also, in the Capital gains working sheet it ask if I need to declare any relief. I went to help and it just directed me to the CG1 form, which I have now filled by hand. Either way should I enter anything into the box asking about relief on the working sheet?Thanks
Customer: replied 1 year ago.
It's ok Tony, I sorted it. I am able to just and write it and attach. Thanks again
Expert:  TonyTax replied 1 year ago.
Any attachment you produce yourself has to be in PDF format.
The worksheet is very straightforward and is the easiest way to disclose the gain. Reliefs are as I said earlier:
Main residence relief: £6,161
Letting relief: £1,339
To save you scrolling up the page here the entries in full:
Box 3: £7,500, Box 30: 1, Box 31: £217,500, Box 32: £210,000 (plus legal fees for buying and selling, stamp duty, selling agent fees, disbursements though you don't need any of these as there is no tax to pay)
Box 33: £7,500, Box 35: LET (see page CGN 3 in the notes), Box 37: Main Residence Relief £6,161, Letting Relief £1,339
Customer: replied 1 year ago.
The work sheet does not come up with these boxes, it is a different format to the actual CG1 form.
Customer: replied 1 year ago.
I filled in the worksheet in and will attach the CG1 form
Customer: replied 1 year ago.
I have saved all the information you gave me. You made it so easy to fill in the CG1 form, which in turn helped me fill the worksheet, but it did not allow me to mention both relief figures in the box above, so just added the information in the explanation box itself.
Expert:  TonyTax replied 1 year ago.
It is a different form but the point is it puts the detail into a format that HMRC will accept and if you look close enough its clear what goes into each box on the worksheet.
Customer: replied 1 year ago.
Thanks Tony
Expert:  TonyTax replied 1 year ago.
Thanks.

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