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: 4189
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

I have a 2nd property that I rent out. I purchased as a

Resolved Question:

I have a 2nd property that I rent out. I purchased as a family home in 1992 for £55,000, I lived in it until 2006 valuation approximately £190,000. I would like to sell it now valuation appoximately £300,000. How much capital gains tax will I have to pay.
Thank you
Maria ********
***************
**************
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello Maria, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

You have a gain of 300K - 55K = 245K. The value at the time of your ceasing occupation is irrelevant as the gain is deemed to rise evenly over time although we all know that this is not the case. Total ownership time was 24 years and letting time 10 years [actually this should be worked out in months]. From the 10 years deduct 18 months as you are deemed to be in residence in the last 18 months even if this is not the case. Thus 8.5 / 24 [35%] of the gain is exposed to Capital Gains Tax (CGT). 35% of 245 is say 86K. Now deduct your non cumulative Annual Exempt Amount (AEA) of 11.1K and Lettings Relief (LR) up to 40K leaves 35.65K which, were this is not a second home will be taxed at 10% or 20% or a combination of the two rates depending on your income including the gain in the tax year of disposal. Worst case scenario would have been a bill of a tad under 7K. However as it is a second home then the old CGT rates apply [18% and 28%] giving a worst case bill of just under 10K.

I do hope that you have found my reply of assistance.

bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.

Thank you for your excellent support.