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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I owned a flat in the UK 7 years, we lived there

Customer Question

Hi, I owned a flat in the UK for almost 7 years, we lived there from 2008 til 2010 when I left the UK and went back to live in my country of birth. I rented the flat out from 2010 until march 2015 but every year with the mortgage payments and the repairs and the commissions to the estate agents we ended un in lossess but we wanted to keep it until we were sure we were not coming back. I have just done my tax return for 2015 but I started to read about declaring the sale of the flat and seeing it was just too complicated I left it out of it. Now I want to declare it but I´m not sure how to do it.
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 be able to help you with your question. From the tenor of your question you still own the flat or have you disposed of it, please confirm one way or the other.
Customer: replied 1 year ago.
I sold the flat in March 2015, as I live abroad I forgot the Self assessment was due and had to do it on a rush yesterday but left the sale out.
Expert:  bigduckontax replied 1 year ago.
Next questions, have you five complete tax years outside the UK between your departure and the sale date? Also what was the actual gain; that is the difference between the acquisition and the disposal price. The acquisition price is the purchase price plus buying costs including stamp duty and improvements eg installation of double glazing, central heating additions extensions etc but not routine maintenance which can be offset against rental income.
Customer: replied 1 year ago.
The flat purchase price was of 185k but we sold it in March 2015 for 320k after commissions and retentions and fees we ended up with 106494.99
Customer: replied 1 year ago.
Now when we got the flat we made a lot of improvements for about 60 thousand pounds, kitchen, flooring walls bathroom etc... but we did that ourselves and didnt keep any of the documents
Customer: replied 1 year ago.
And as I said, while it was rented from 2010 untilits sale in march 2015 we had lossess because the rent just about covered the mortgage repayments plus repairs and agent fees we lost about 2k per year
Expert:  bigduckontax replied 1 year ago.
What month did you buy it and what month did you start renting it out?
Customer: replied 1 year ago.
Ok, the completion of registration dates is the 13 September 2006, sorry I got the date wrong before, and the tenants moved in March 2010
Expert:  bigduckontax replied 1 year ago.
The reason I asked is because everything is done in months. Your total ownership period was 102 months. Letting period was 60 months. Your liability to Capital Gains Tax (CGT) is 60 / 102 of the gain say 59%. 59% of 106.5K is 62.6K. Deduct your Annual Exempt Amount of 11.1K leaves 51.5K. You are entitled to Letting Relief of up to 40K leaves 11.5K. This is taxed at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of disposal.
However, the 60K you spent on improvements is allowable against the gains. Even though you did not retain supporting evidence I do not think there is any doubt that HMRC would allow this against the gain particularly as you only need some one sixth of the sum to cover the remaining 11.5K. However, I think you might find it useful to engage a local, trusted professional to negotiate with HMRC on this matter. As you did not include the sale in your 15/16 tax return your return will require amendment and this is better dome by a third party on your behalf even if, as it appears likely, there is no CGT due.
Customer: replied 1 year ago.
Ok, would you recommend anybody in the UK that can help me with that?
Expert:  bigduckontax replied 1 year ago.
I am sorry, but Just Answer protocol does not permit me to make individual recommendations. However it is within the province of any competent accountant.
Customer: replied 1 year ago.
Ok thanks, ***** ***** get in contact asap. Thank you.
Expert:  bigduckontax replied 1 year ago.
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Category: Tax
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Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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