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Sam
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Category: Tax
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Capital Gains Tax: We are thinking to sell our property in

Resolved Question:

Capital Gains Tax: We are thinking to sell our property in the UK and buying another. Before committing to the sale we need to understand if we would be liable for capital gains tax on the sale our primary house and if so, how much?
The main details are as follows:
- Current property owned in joint names: Mark & Michelle Day
- Purchased in Dec 2001 at a price of GBP200,000
- Conservatory added in early 2002 at a cost of approx. GBP10,000
- Occupied by Day family from Dec 2001 to July 2006
- Rented from Sept 2006 to Aug 20013
- From Aug 2013 to current date our children have been living in the property, but my wife and I are in Singapore.
- Council tax on the property paid by Mark & Michelle Day from Dec 2001 - July 2006 and then from Aug 2013 until now
- Property now for sale for GBP415,000
- New property to be purchased for GBP570,000 for our children to continue living in, with possibility of my wife living in UK for longer periods than she is living in Singapore.
Submitted: 8 months ago.
Category: Tax
Expert:  Sam replied 8 months ago.

Hi

Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer

Yes there will be a capital gain arising as you are selling a property that ceased to be your main residence more than 18 month ago and the fact you plan to purcahse a new property has no bearing as this is not a business.

However as you have lived abroad since 2006? then under the old residency rules you would have remained free of UK capital gains due to having achieved a period of non residency for more than 5 full tax years. However, residency rules changed from 06/04/2015 and any sales of UK properties made by non resident individuals see the gain that arises from 06/04/2015 to the date of sale as being liable in the UK - I enclose the information in the link as to hwo you should proceed once the sale is complete (and of course note with this new purchase, any future sale will give rise to the full capital gain being considered in the UK)

https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property

And this link advises how to make that calculation

https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-calculating-taxable-gain-or-loss

Do let me know if I can assist further

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 13775
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you
Customer: replied 8 months ago.
Hi Sam,Thank you for your quick reply. I have used HMRC calculator to estimate CGT liability, using current estimates. It seems there are enormous differences (GBP47,000 based on change in value from the date of purchase to the date of disposal, or: GBP1,500 based on the increase in value since April 2015). Consquently I have the following questions:
- Can such enormous variations be real?
- This is our only owned property and we plan to buy another with the proceeds of this sale. Are they any CGT exceptions/allowances?
- Would liability be reduced as property is jointly owned?
- As we have not UK tax payers, is it possible to use annual income tax allowances to offset CGT?
- How do we get a valuation on our property as at April 2015?
- Are you able to give specific advise once our position becomes clearer?
Expert:  Sam replied 8 months ago.

Hi

Thanks for your response and further questions

It will be the latter gain that is considered (so the gain made just from April 2015 to sale) as the gain that arises from you leaving the UK until 05/04/2015 will be preserved under the old residency rules.

So yes the variations are real and correct as one looks at the situation had you been UK resident throughout and the other looks at the changes of legislation and how that affects you - which is merely the gain made from 06/04/2015 to estimated date and value of sale - so your gain is set to be £1500 estimated

There are no capital gains exemptions or reliefs beyond the annual exemption allowance of £11,100 (so you will have NIL capital gains to pay based on your estimated position)

Yes if the property is jointly held then each of you share the gain arising and each of you have the £11,100 exemption (so with a gain of estimated £1500 - thats £750 each - less the annual exemption allowance (due for each of you) so NIL capital gains to pay

No you cannot use personal allowances against a capital gain just the annual exemption allowance as indicated above

To get an accurate value pre April 2015 - two local estate agents or the district valuer - link here for them (but HMRC would accept 2 x local estate agents post period) https://www.gov.uk/government/organisations/district-valuer-services-dvs

Finally through out affiliation with Just Answer, we cannot take on clients met through this service directly - but if you are seeking just information and guidance to mange matters yourself - then do come back to Just Answer and you can always ask for me

Thanks

Sam

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