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 TonyTax Your Own Question

TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15847
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
13905389
Type Your Tax Question Here...
TonyTax is online now

My wife and I own a family holiday home, if I sell for

Customer Question

My wife and I own a family holiday home, if I sell for £300000, having bought for £50000 25 years ago, and buy for £300000 somewhere else based on my understanding we would be liable for £78000 capital gains tax and £24000 stamp duty, making £102000 tax. This seems grossly unfair, am I right?
Submitted: 10 months ago.
Category: Tax
Expert:  TonyTax replied 10 months ago.

The gain would be £250,000 (£300,000 - £50,000). The first £11,100 would be tax free leaving a net taxable gain of £238,900. If there are joint owners, then the gain is divided between them and each part owner has a tax free amount of £11,100.

There are two rates of CGT, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in the tax year you sell the holiday home. The most that can be taxed at 18% is £32,000 and that is reduced by £1 for every £1 of income you have over £11,000 in 2016/17.

Using the calculator here, I have computed the stamp duty at £14,000.

I hope this helps but let me know if you have any further questions.

Customer: replied 10 months ago.
Ok, but how can I reduce the tax payable, the first house is leasehold and part of a large Victorian house, whenever there are structural renewals required such as the roof we all share those costs, are these valid deductibles?
Expert:  TonyTax replied 10 months ago.

I'm afraid that there is little that you can do other than to have your spouse as a joint owner and to sell in a tax year when your incomes are low so that more of the net taxable gain is charged to CGT at 18%. Repair and maintenance costs are not deductible from a capital gain but improvement costs are.

Customer: replied 10 months ago.
improved roof design replacement with longer life guarantee would count as deductable?
Expert:  TonyTax replied 10 months ago.

If it enhances the property value, then you could claim your share of the cost.

Customer: replied 10 months ago.
But painting and decorating could enhance value, but I understand that doesn't count?
Expert:  TonyTax replied 10 months ago.

Painting and decorating are general maintenance. Look here for more information.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15847
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 9 months ago.
If I had a mortgage on the property would that be deductible from the proceeds of sale before the Cap Gains Tax calc?
Expert:  TonyTax replied 9 months ago.

I'm afraid not. If you bought the house with a mortgage, then it is simply part of how you funded the purchase.

Customer: replied 9 months ago.
if we died and our estate fell below the inheritance tax threshold would the beneficiaries be liable for capital gains tax on the second home please?
Expert:  TonyTax replied 9 months ago.

If you inherit a property on the death of another individual, its cost for CGT purposes is the value at the time of death, ie the probate value. So, if the person who inherited the property sold it soon after they inherited it, it would be unlikely to give rise to a significant gain.

Customer: replied 9 months ago.
if we gave the second home as a gift to our children and outlived them by 7 years, would we incur CGT at the time of giving?
Expert:  TonyTax replied 9 months ago.

If you make a gift of an asset such as a property to your children, there may be CGT and IHT implications.

There will be a CGT liability in the tax year during which the gift is made if the value of the property when you give it away to a connected person is more than the price you paid for it. If you live for at least seven years after making the gift, it will escape IHT. If you don't live for at least sevn years after making the gift, the value of that gift will form part of your estate for IHT purposes even though you no longer own the property.

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.