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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15840
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I need someone to help me calculate the capital gains tax owed,

Customer Question

I need someone to help me calculate the capital gains tax owed, when I sell my rented flat later this year. I bought my flat 15 years ago for 72,000. I lived in it for 4 years and it's current value is 420,000. How much capital gains will I have to pay if I sell it?
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.
Hi. Did you live in the flat for the first four years after you bought it? Can you tell me what the level of your annual income is please.
Customer: replied 11 months ago.
Yes I lived in for 4 years after I bought it. The property is still mortgaged for 150,000 and takes a rental income of 1200.00 a month.
Expert:  TonyTax replied 11 months ago.
Thanks. Do you have any income other than rental income? I need to know what the total of all your income is including net of expenses rental income and whether any of your income is in the form of dividends on shares you may own. What was the month and year of purchase? When will you be looking to sell?
Customer: replied 11 months ago.
I will have to collate that information today,
so that you have everything you need for the most accurate answer. Can I get back to you later today or early tomorrow morning? Many thanks. Diane
Expert:  TonyTax replied 11 months ago.
Yes, you can.
Customer: replied 11 months ago.
I am self employed with an income of £20,000/£30,000 per annum, last years 2014/15 net income was £1800.00. I have no share dividends. I purchased the property in July 1998 and plan to sell in the summer.
Expert:  TonyTax replied 11 months ago.
Thanks. Leave this with me while I do some calculations.
Expert:  TonyTax replied 11 months ago.
If you sell the property in August 2016 for £420,000 having paid £72,000 for it, you will make a gain of £348,000. You can also deduct the costs of purchase and sale (legal fees, stamp duty, survey fees, selling agent fees).Total period of ownership to August 2016: 218 monthsPeriod of owner occupation: 48 monthsPeriod of letting: 170 monthsExempt gain: £105,358 (£348,000 / 218 x 66 months (48 months + last 18 months of ownership)Letting period gain: £242,642 (£348,000 / 218 x 152 months (170 months - last 18 months of ownership)Gross Non-Exempt Gain: £242,642Letting Relief: £40,000 (lesser of £40,000, £105,358 and £242,642)Annual CGT Exemption: £11,100Net Taxable Gain: £191,542 (£242,642 - £40,000 - £11,100)The CGT cannot be more than 28% of the next taxable gain (£53,631.76). However, depending on your income level in 2016/17, some of the gain may be charged at 18%. The maximum amount taxable at 18% can be no more than £32,000 and that figure will reduce by £1 for every £1 of income over £11,000 that you have in 2016/17. Refer to HS283 for information on the main residence and CGT.I hope this helps but let me know if you have any further questions.
Customer: replied 11 months ago.
My question originally was how much capital gains tax would I have to pay when I sell it.
Customer: replied 11 months ago.
I understand the gain I havemade is £348.000 but what amount of capital gains tax will I have to pay if I sell it. You have not answered my question.
Expert:  TonyTax replied 11 months ago.
Near the bottom of my answer I said that the CGT could not be more than £53,631.76 which would be the case if all the gain was taxed at 28%. I then qualified that by saying that some of the gain may be taxable at 18% depending on the level of your income in 2016/17. I didn't want to give too many figures to avoid confusion so I gave you the worst case scenario. However, if your income in 2016/17 is £21,800, then the CGT will be £51,511.76 with £21,200 of the net taxable gain being charged to CGT at 18% and the balance at 28%. If your income in 2016/17 is £31,800, then the CGT will be £52,511.76 with £11,200 of the net taxable gain being charged to CGT at 18% and the balance at 28%.
Expert:  TonyTax replied 11 months ago.
Can you tell me why you have rated my answer negatively please.
Expert:  TonyTax replied 11 months ago.
You are the first person to rates a technically correct answer by me to a CGT question negatively. The idea is that if you have any queries, you point them out before trashing an expert's reputation on this site.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15840
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 11 months ago.
I am sorry to have rated you negatively, I was viewing you answers on my iPhone and the answers came up incomplete and with letters replaced as numbers. Now I have viewed you answers in full on my iPad I see my initial reaction was incorrect. I am pleased to re rate your answers as good.I do however find the calculation of CGT very confusing and wonder when I do come to sell my property who will do the final calculation as there seem to be many factors to take into consideration to reach the final and most accurate figure.
Expert:  TonyTax replied 11 months ago.
Thanks for changing the rating. The tax return part is the easy bit. You have to attach a calculation of the gain to your return so if you sell it in 2016/17, you can simply copy my answer onto a sheet of paper, fill in the few boxes that you need to on the capital gains pages (this is the 2015/16 set), attach that to the paper tax return and submit it to HMRC by 30 September 2017 to give them time to calculate the tax and tell you what you need to pay by 31 January 2018 assuming that you sell the property in the current tax year, 2016/17. If you complete the 2017 tax return using the HMRC online software, there is a worksheet built in and it is obvious what you need to put into each box. Again, all the information you need is in my answer. The software calculates the tax for you and you have until 31 January 2018 to submit the tax return to HMRC and pay the tax.

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