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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am single have sold my property and now live with elderly

Customer Question

i am single have sold my property and now live with elderly parent how can i avoid or reduce capital gains tax on sale of my property please
Submitted: 4 months ago.
Category: Tax
Expert:  TonyTax replied 4 months ago.

Hi.

Has the sale completed? Did you live in the property for the entire period of your ownership of it or was it ever empty or let?

Customer: replied 4 months ago.
Hi Tony
Sale is due to complete on 28th July, I have not lived at property for over 5 yrs during which time it was let and most recently left empty as I prepared for the sale my auction
Expert:  TonyTax replied 4 months ago.

Thanks.

You might refer to HS283 for information on the main residence and CGT. In particular, Example 9 is of relevance to you.

There isn't much you can do I'm afraid. If you put the property into joint names with your elderly parent for example to divide the gain, you would lose half the tax free gain you are entitled to as a result of the property having been your main home.

As the property was your main home, the gain for that period will be exempt from Capital Gains Tax as will the gain for the last 18 months of ownership. In addition, as the property has been let as well as having been your main home at some point, you will be entitled to a further deduction from the gain called letting relief which will be the lesser of:

1 £40,000,

2 the sum of the gain for the period you lived in the property and the gain for the last 18 months of ownership and,

3 the gain for that part of the letting period not covered by the last 18 months of ownership.

If there is any gain left after the deduction of main residence relief, the last 18 months relief and letting relief, the first £11,100 of what is let will be tax free due to the annual CGT exemption.

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 dispose of the property. Take a look here to see how to work out how much of the gain will be charged at 18%, 28% or a combination of the two.

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

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