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Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Benjamin Franklin once sagely observed that in life there are but two certainties, death and taxes and as a result of Gor***** ***** abolishing the Dependent Relative Relief in 1988 you have been caught! However, giving money to your wife is an inter spousal transaction and outside the scope of UK taxation altogether.
Firstly forget all about mortgages, they do not come into the computations at all. Your mother's removal from the title deed matters not a jot for her despite it being a disposal as she would be entitled to Private Residence Relief (PRR) which is allowable at 100%. There is a problem though as you only owned half the property 1989 to 2001. You thus acquired the second half then at the current market value then. Can you give me some indication of what that value might have been?
We have a further complication, where did you live after you sold your house?
Once I have the answer to these points I hope to be able to help you further.
Thank you for that information. Your purchase price was 5.25K plus 45K, plus 16K total 66.25K. You sell at 140K so your gain is of the order of 73.75K. From this knock off 11.1K non cumulative Annual Exempt Amount (AEA) leaving say 63K exposed to CGT. The total ownership time is 27 years (you actually calculate this in months) and your occupation time was 2 years plus the last 18 months of ownership when you are deemed to be in occupation even if this is not the case; occupied 3.5 years. Thus 27 - 3.5 / 27 = say 87% of the 63K ie say 55K is exposed to CGT which will be levied at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale. A worst case scenario is a tax bill of say 15.35K.
I do hope that you have found my reply of assistance.
You you are caught by my worst case scenario.
You do not need to declare this gain until you self assess for the tax year of sale. HMRC will then tell you how much you owe and this will have to be paid by 31 January in the year after the tax year of sale. In the meantime I suggest that you put it on deposit. Were you non resident then there is a 30 day limit for declaration and payment.
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