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
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4200
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

If a person bought a flat 17 years ago for £38,000 leasehold,

Resolved Question:

If a person bought a flat 17 years ago for £38,000 leasehold, lived in it for the first 9 years, then the flat is empty for the last 8 years and may now be worth around £200,000 leasehold how much capital gains tax would be payable if sold. No renting took place. Some refurbishment is now necessary.
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. The capital gain on this flat is 200K - 38K = 162K. The period of occupation as the sole or main domestic residence of the owner creates an entitlement to Private Residence Relief (PRR) which reduces the CGT by 100%. The gain would be reduced by the refurbishment providing that this is an improvement eg installation of double glazing, central heating, extensions etc, but not routine or deferred maintenance. The total ownership period is 204 months. The empty time is 96 - 18 = 78, for the last 18 months of ownership the owner is deemed to be in occupation even if this is not the case. Capital Gains Tax (CGT) will be applied proportionately at 78 / 204 [38.23%] to the gain of 162K = say 62K Deduct the non cumulative Annual Exempt Amount (AEA) of 11.1K leaves 50.9K exposed to CGT. This will be taxed at 18% or 28% or a combination of the two rates depending on the owner's income including the gain in the tax year of sale. A worst case scenario would be a tax bill of some 14.25K. I do hope that you find my reply of some assistance.
Customer: replied 1 year ago.
There were a few things I forgot to include. The flat was in my name only. I have however another property which was bought in joint names by myself and my husband 40 years ago. When I lived in the flat for 9 years I lived there on my own and then went back to the house for the last 8 years. The flat is still furnished and I stayed there on a few occasions. I paid electric bills but obviously these were very low. I also paid council tax. In the event of a sale would bills have to be produced at some point in order for calculation to take place. Would these new facts have a bearing on the amount of capital gains tax. Apologies for not explaining all the relevant facts. I have tried googling before contacting your website but find the position very confusing.
Expert:  bigduckontax replied 1 year ago.
Only improvements, as I told you in my original answer, affect the GCT position so my original advice stands. Receipted bills might then be useful to support your case in reducing the gain, but from the tenor of your question this appears unlikely.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.
Expert:  bigduckontax replied 1 year ago.
And your generous bonus.