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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13775
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I would like assistance with calculating the capital gain on

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I would like assistance with calculating the capital gain on a property which I jointly owned, and was my main residence for part of the time. I have done the calculations on an excel spreadsheet and would like someone to check that the calculaitons are correct and that my assmptions as to what are allowable expenses are correct. I do not need assistance with the tax return itself, I do this myself using TaxCald.
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi Thanks for your question - I am Sam and I am one of the UK tax experts (and ex HMRC and now run my own accountancy business) Could you supply the following information along with the excel spreadsheet1) date property bought and purchase price2) costs to buy (stamp duty and legal fees etc)3) Costs of any capital improvements - such as new kitchen etc5) Why this was not your main residence throughout and was it let out at all - if so were those rents declared to HMRC and what dates did you rent this out? 6) date property sold and sale price7) selling costs - estate agents and legal fees Thanks Sam
Customer: replied 1 year ago.
1) date property bought and purchase price
17 February 1994, £70,000.002) costs to buy (stamp duty and legal fees etc)
solicitors fees for purchse (including stamp duty) £1267.833) Costs of any capital improvements - such as new kitchen etc
listed in the 'expenses' tab of the spreadsheet - the big one is £11 for roof modifications - I would like to know if this would be consdered eligible or not5) Why this was not your main residence throughout and was it let out at all - if so were those rents declared to HMRC and what dates did you rent this out?
the property was jointly owned by my parents and I (1/3rd each - my mother inherited my Father's share on his death). For the first few years I lived either with my parents or in rented accomodation hence assume the property can be considered my main residence for that time. I then purchased my own separate property which I assume became my main residence (I did not pay CGT when I sold it, and I now own another property which is my main residence)6) date property sold and sale price
19 December 2014, 1620007) selling costs - estate agents and legal fees
to be added, Im looking for these at the momentexcel file should be attached - let me know if it isnt as im not sure if I have attached it correctly!
Expert:  Sam replied 1 year ago.
Hi will be back soon - will calculate and compare to the attchment - should be no more than 10 mins hope thats acceptable ! Sam
Expert:  Sam replied 1 year ago.
Hi Firsy follow up questions When you advise roof modifications - was this the whole roof ?When did the changes of shared ownership apply - was it initially purchased just by your parents - or did all three of you make the purchase, when did you actually live there (as this is the only time that will apply for private residence releif) When did your father pass away - and did you still own just 1/3rd when sold? (And have you applied the total costs to buy and sell etc - as it may be only 1/3rd of those costs will apply) So I need the actual dates you lived there Thanks Sam
Expert:  Sam replied 1 year ago.
Hi I can see from spreadsheet you owned a 1/3rd share throughout and that I assume thids was actually your home from the date of purchase Feb 1994 to 21/12/2000 - but is this date you moved out to buy your own property or did you move out before this date and rent for yourself? None of the capital improvements are allowable other than perhaps the kitchen replacement - but you advise just the sink waste disposal and cupboards - was there no washing machine , tumbler fridge or freezer or dish washer ? As to be allowable it has to be the WHOLE kitchen replaced (and thats why the other house costs are not allowable as not the wntire house, or falling within the remit of capital improvement but repair or maintenance) so the roog, one window double glased and bolier and shower and chimneys removed and part repair to roof, and gutter and cooker not allowable under the capital improvement and capital gain remit - Buts legal costs to buy and sell are allowable Can you also let me know the above answers 0 dates you actually lived there Thanks Sam
Customer: replied 1 year ago.
When you advise roof modifications - was this the whole roof ?
Two chimneys were removed, whole roof had tiles removed, felt replaced and tiles put back.When did the changes of shared ownership apply - was it initially purchased just by your parents - or did all three of you make the purchase, when did you actually live there (as this is the only time that will apply for private residence releif)
It was purchased in all three names (previous property was also jointly owned but I always lived there). Stictly speaking I didnt physically live in the property, I was in separate rented accomodaiton as a student - but I assumed that if you only own one property it is considered your main residence for tax purposes whether you actually live there or not?When did your father pass away - and did you still own just 1/3rd when sold? (And have you applied the total costs to buy and sell etc - as it may be only 1/3rd of those costs will apply)
My father died in 2011, his will left everything to my mother hence she then owned 2/3rd of the property and I still owned 1/3rd
Expert:  Sam replied 1 year ago.
Hi Thanks for your response I am afraid then none of the costs are allowable (not even the initially thought kitchen costs as you mention replacement of cooker later - and capital improvements has to be a total replacement not just part)and those expenses such as rewiring although are repairs fall under the remit of maintenance and not capital improvements If you never lived there then you have no entitlement to private residence relief, as its where your reside not whether you just own the property in name only - and I have no idea who might have suggested otherwise but this is not correct so I am glad you asked for expert advise rather than make a false claim for relief that's not due. So you will have the following gain Sale price £162000 less purchase price £70000 = £92000 gain/3 = £30666Less 1/3rd purchase costs £423 and approx 1/3rd sale costs £667 so deduct £1090That leaves £29576 with the first £11,000 as exempt -So £18576 liable to capital gains at either 18% or 28% (this depends on your annual income and whether you have any unused basic rate band) so at worst x 28% = £5201.28 or at best between £3343.68 and £5201.28 Let me know if I can assist further Thanks Sam
Customer: replied 1 year ago.
Just to make sure we have got it absolutely correct about the private residence relief (as it makes a huge difference!). The inland revenue website (https://www.gov.uk/tax-sell-home/absence-from-home) states the following:"If you have one home or you nominated your home
You get relief if you were away from it for:
any reason for periods adding up to 3 years
up to 4 years if you had to live away from home in the UK for work
any period if you were working outside the UK
You must have lived in the home before and afterwards, unless your work prevented you."What is the definition of 'living in the property'? I had a bedroom there, all my posessions were there and outside University term time I lived there. I could also argue the my work prevented me living there permanently as I was at university in Southampton and then London so it wasnt feasible to live in the midlands. So this would imply that up to 4 years is eligible due to the "up to 4 years if you had to live away from home in the UK for work"?
Expert:  Sam replied 1 year ago.
Hi But it has to have been your main residence during the period of ownership for to be be even considered as eligibleto1) Nominate - which it was not (as you advise you never lived at this specific property) and even if you did for holidays (which would not count) you did not nominate with HMRC to keep it as remaining as your main residence - something cannot remain as - when it never was in the first place. 2) You cannot have the additional absences without initially having it treated as your main residence which it was neither so from the date of purchase or become so after any specific absence ceased to exist You have to read ALL the legislation not just cherry pick the additional reliefs to make them fit how you wish them to ! nd I am sure I would not be giving you expert advise if I just told you want you wish to hear. You quoteIf you have one home or you nominated your home (this is where it falls down as it was never your home as you state you never lived there !) You get relief if you were away from it for:any reason for periods adding up to 3 yearsup to 4 years if you had to live away from home in the UK for workany period if you were working outside the UKYou must have lived in the home before and afterwards, unless your work prevented you." Then you quote What is the definition of 'living in the property'? I had a bedroom there, all my posessions were there and outside University term time I lived there. I could also argue the my work prevented me living there permanently as I was at university in Southampton and then London so it wasnt feasible to live in the midlands. So this would imply that up to 4 years is eligible due to the "up to 4 years if you had to live away from home in the UK for work"? You advise the purchase was made whilst you were at university - so tell me how often did you physically spend the night there from the purchase date in Feb 1994 to when university ceased to be a reason as you would be treated as living at University and you stated that "Stictly speaking I didnt physically live in the property, I was in separate rented accomodaiton as a student - but I assumed that if you only own one property it is considered your main residence for tax purposes whether you actually live there or not?" and its no that basis I have provided the advise You then also advise "I could also argue the my work prevented me living there permanently as I was at university in Southampton and then London so it wasnt feasible to live in the midlands" but as it had never been treated as your main residence from the beginning you cannot then have releifs considered as there HA to be an initial treatment of this being your main residence which you state there is not) The kwy question is when in University did the rental accommodation last annually (so rented all year round) or just term times Thanks Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13775
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Looks as though I just have to accept that I dont have the private residence entitlement. I think the university accomodation was annual so I dont even have that argument.
At least I made sure I kept the tax to a minimum by putting plenty in my pension to stay in the 20% band.Thankyou for your advice, it has been very helpful even though it wasn't what I was hoping to hear!Best regardskeith

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