How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3833
Type Your Tax Question Here...
bigduckontax is online now

I am finding it difficult to calculate how much capital

Resolved Question:

Hi, I am finding it difficult to calculate how much capital gains tax I am likely to pay after my ex-partner bought me out of a buy-to-let property we jointly owned first as our family home, then as a buy-to-let. I have provided some information below:
2000 bought family home in Croydon with partner for £95,000.
2003 remortgaged family home to £115,000
2007 converted it to a buy to let mortgage to £225,000, to release equity to purchase new family home in Croydon with partner and tenants moved into the buy to let property.
2014 split from partner and sold family home divided proceeds 50/50, I moved into rented accommodation in Northumberland with our 2 children, my ex-partner moved into the buy to let property.
2015 (September) buy-to-let property valued at £260,000 ex-partner bought me out of the buy to let giving me approx £20,000.
2015 (November) I moved out of rented accommodation and purchased a new home in Northumberland for myself and 2 children.
Ex-partner now lives in this house (which is on a new buy to let mortgage) and has our children some of the school holidays.
The self assessment tax for the tenanted property has always been completed in my name, next year I won't have to do a tax return for the rent but I will have to consider capital gains. Can you help me estimate how much I will owe.
Thank you
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello Dawn, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Your acquisition price is 47.5K. Your ownership time is say 174 months. Letting time was 82 - 18 as the last 18 months are ignored as you are deemed to be in occupation even if this is not the case. Thus 64 / 174 [36.78%] of the gain is exposed to Capital Gains tax (CGT). Selling price was 260K / 2 = 130K so gain is 130K - 47.5K = 82.5K @ 36.78% = 30.34K. Deduct 11K Annual Exempt Amount (AEA) [14/15 rates] leaves 19.34K. Lettings Relief (LR) up to 40K is available depending on the rental received as you lived in the house before you let it out. So in all probability there will be no CGT to pay. Better than the proverbial poke in the eye with a sharp stick! Mortgages are irrelevant in CGT computations. I do hope that you have found my reply useful.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

Related Tax Questions