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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13862
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Capital gains tax liability on a jointly owned ( husband and

Customer Question

capital gains tax liability on a jointly owned ( husband and wife) former main residence currently let
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
HI Thanks for your question Could you expand on your question please I can however advsie that if its been more than 18 months since you vacated this property then you will have a capital gain consideration although with the tax reliefs due this may allow the capital gaion tax to be very low or even NIL it depends on how much time has lapsed since you vacated and the reason why you left this property.So p;ease advsie further Thanks Sam
Customer: replied 1 year ago.
1) We acquired the house as our single main residence in Jan 2004 for £400,000
2) purchase costs were £10,000 and we spent £100,000 on refurbishment/improvements
3) The house is owned jointly with my wife. I am a top rate tax payer and my wife earns below the tax threshold
4) In May 2012 we moved into our current residence and let have let out the house since that time
5) I would estimate that as at May 2012 the value of the house was around £600/625,000
6) The house is now on the market for £750,000
7) we have made no other capital gains or losses
8) we lived in the house continuously from purchase to May 2012
9) we left the property for personal reasons to be closer to our childrens schools and thought that one day we may move back in
10)we have now decided the house is too large for us hence the reason we are selling and also I am planning on retiring in 2017
Expert:  Sam replied 1 year ago.
Hi Thanks for your response Then as its been more than 18 months since you vacated the property then you will have a capital gain consideration arising. But you will be entitled to private residence relief for the time you lived there plus the last 18 months of ownership AND will be due private lettings relief as you let out a property that had been your main residence (this is assuming you have declared the rental income to HMRC) And of course the first £11,100 will be exempt as this is the annual exemption allowance So you will have a very small capital gain if any at all. Do advsie HMRC when the property is sold, and the gain or loss then should be declarer to HMRC on each of your self assessment tax returns (which you will complete due to the shared rental income) and any tax due will then be payable the following 31st Jan Do let me know if you require any furtehr assistance Thanks Sam
Customer: replied 1 year ago.
Thanksactually we moved from there house in May 2011 not 2012Would it be possible to calculate the amount of tax we would have to pay
Customer: replied 1 year ago.
and yes the rental income has been fully declared to HMRC
Expert:  Sam replied 1 year ago.
Hi As this is over and above what the original question suggested you required - and this is time consuming - I have sent you a request for furtehr assistance (with an amount that would be fair for the work involved) Thanks Sam
Customer: replied 1 year ago.
ok thanksthats more than I would like to pay so if you could just let me know if their is a calculator tool on the HMRC website that could help me that would be greatthanks
Expert:  Sam replied 1 year ago.
Hi I am afraid there is no tool on HMRC as every calculation is variable according to time owned and whether reliefs are due (if it was the main residence and private lettings relief are due) and its those reliefs and time apportionment that makes it a fairly consuming exercise - hence the amount asked for There does appear to be some on other sites but I could not vouch for them (just type in capital gain calculator or tool) but certainly you could give them a try - (May at least give you a baseline idea of the gain and tax due) But I accept that you do not wish to use the additional services, but it would be appreciated if you could rate the level of service provided to your initial question - Thanks
Customer: replied 1 year ago.
to clarify is it 72 extra or 72 in total
Expert:  Sam replied 1 year ago.
Hi The amount offered is in total (for the intial question and the additional services) Thanks Sam
Sam and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
ok
would you for this price also include a final valuation when the property has been sold and could I use this in my tax return
Expert:  Sam replied 1 year ago.
Hi No I am afraid it would offer you the calculation for now - if you wished help again in the future - and wished to use Just Answer you would need to come back as a full new calculation would need to be made as the length of ownership and private residence relief and private lettings relief would have changed (as might the gain itself) . Let me know if you wish to proceed with the additional time as this also would need accepting to proceed Thanks Sam
Customer: replied 1 year ago.
ok lets go ahead
Expert:  Sam replied 1 year ago.
Thanks for your response I have sent an additional services request for you (will follow after this message ) ThanksSam
Expert:  Sam replied 1 year ago.
Hi I see you have accepted the original request so I shall proceed with the calculation - a response will follow soon as its timely Thanks Sam
Expert:  Sam replied 1 year ago.
Hi Ok calculation is as follows The intial gain is the sale price less the purchase price - which means £750000 less £400,000 so initial gain of £350,000You advsie that the costs to buy were £10,000 and I estimate that the costs to sell would be £10,000 approx and you advsie that £100,000 was spent on capital improvements - this is then deducted from the initial gain so£350,00 less £120,000 leaves a gain of £230,000Then we consider private residence relief - which sees that you have at this time owned the property 147 months of which this was your main residence for 76 monthsSo private residence relief (PPR) is the time you lived there plus the last 18 months of ownership so a total period of 94 months SO private residence relief (PPR) is £230,000 x 94/147 = £147,075This is then deducted from the gain so £230,000 less £147,075 = £82,925 Then private lettings relief which is the lesser of 1) The amount of gain on which PPR was due - so £147,0752) The amount of gain left over after PPR has been awarded so £82,925Or3) £40,000 As the lesser amount is 3) £40,000 this then is applied for EACH of you, and as your half share of gain at this stage is £41,463 - £40.000 you each have £1,463 gain to considerWhich is then covered fully by each of your entitlement to annual exemption allowance of £11,100 so your capital gain tax bill at this stage will be NIL Let me know if I can assist further Thanks Sam
Customer: replied 1 year ago.
thank you this is very helpful
Expert:  Sam replied 1 year ago.
You are very welcome - and you can follow the method of calculating by substituting the figures and periods of ownershipJust be mindful that the annual exemption allowance is suject to change as might be the capital gains legislation so keep abreast of any changes Thanks Sam
Customer: replied 1 year ago.
Hi SamI have been charged twicethe first time on April 9th £36 and then again on the 12th £71.44
Expert:  Sam replied 1 year ago.
Hi Thanks for letting me know - this is due to the fact you accepted the additional services but I would have expected it just be £71.44 in total This will need to be taken up with customer services - I have added a link here for you (as we do not get involved in the money side of the site)http://ww2.justanswer.co.uk/en-gb/contact-us They can rectify the situation for you ThanksSam

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