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bigduckontax
bigduckontax, Accountant
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We purchased a second home in august 2002. We are thinking

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We purchased a second home in august 2002. We are thinking of selling and have an offer of £140,000 for the property. It is jointly owned and I am the only owner with an income at standard tax rate. My partner is registered self employed but does not earn enough to pay income tax. We have used the property as a holiday let for around 8 years. We have receipts up to around £20,000 for improvements. The purchase price was £62,000. I believe we are each entitled to around £11,000 allowance for capital gains.
Is it possible to provide an idea of capital gains liability if any, based on the information above.
Submitted: 9 months ago.
Category: Tax
Expert:  bigduckontax replied 9 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Well, not quite, the Annual Exempt Amount (AEA), non cumulative, is actually 11.1K! Your gain is 140K - 62K - 20K = 58K. Divide by 2 as it is jointly owned (legally a joint tenancy) leaves 29K gain each. Knock off the AEA gives 17.9K exposed to Capital Gains Tax (CGT). CGT is levied at 18% or 28% or a combination of the two rates depending on the individuals' income including their share of the gain in the tax year of sale. If you lived in this property before or after the lettings period you may be entitled to Lettings Relief (LR) up to 40K in addition to AEA. If you are going out of this business then Entrepreneurs' Relief may apply which limits CGT to a flat rate of 10% The worst case scenario is a CGT liability is of the order of a tad over 5K each at the higher rate and could, of course, be considerably below this if the 18% or the 10% rate applies. I do hope you find my reply of assistance.

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