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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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Capital Gains Tax after selling a rental property Assistant:

Customer Question

Capital Gains Tax after selling a rental property
Assistant: Thank you. Can you provide any more details to help us find you the right Expert?
Customer: We are hoping you can help with a CGT calculation on a Buy To Let property which we have sold.A basic outline is below but should you be able to help and need more information please do ask.Bev Puchased the property 15/9/1998 £35000Bev lived there until 1/7/2000 (22 months )The property was then let out from 1/7/2000 it was let for a total of 14yrs 7 Months ( 175months)I became joint owner in 2004The property was sold 18/8/2015 £119500I know we can deduct purchase and sale costs ie: Soliciitor and estate agent fees.However I'm unsure how these get divided up between us if at all.I believe Bev gets Private Residence Relief and Lettings ReliefI am unsure how to calculate our CGT liability .Any guidance much appreciated. Mark
Submitted: 6 months ago.
Category: Tax
Expert:  bigduckontax replied 6 months ago.

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

Customer: replied 6 months ago.
Hi Kieth.A basic outline is below but should you be able to help and need more information please do ask.Bev Puchased the property 15/9/1998 £35000Bev lived there until 1/7/2000 (22 months )The property was then let out from 1/7/2000 it was let for a total of 14yrs 7 Months ( 175months)I became joint owner in 2004The property was sold 18/8/2015 £119500I know we can deduct purchase and sale costs ie: Soliciitor and estate agent fees.However I'm unsure how these get divided up between us if at all.I believe Bev gets Private Residence Relief and Lettings ReliefI am unsure how to calculate our CGT liability .Any guidance much appreciated. Mark
Customer: replied 6 months ago.
PS. We are married if that helps.
Expert:  bigduckontax replied 6 months ago.

Sorry my PC crashed on me and I must opt out.

Expert:  TonyTax replied 6 months ago.

Hi.

Can you tell me when you got married (month and year) and when you became a joint owner (month and year) please.

Customer: replied 6 months ago.
Hi Tony TaxWe married July 2003 Checked our records and we became joint owners September 2002 ( not 2004 as per my question)Many thanksMark
Expert:  TonyTax replied 6 months ago.

Thanks.

Just to confirm, you never lived in the property. Do you have any idea as to the value of the property in September 2002?

Customer: replied 6 months ago.
HiNo I never lived in the flat. Identical flat in the same block sold for £50,000 in 2002 .
Expert:  TonyTax replied 6 months ago.

Thanks.

Leave this with me while I do some calculations and draft my answer. It will take a while.

Customer: replied 6 months ago.
Much appreciated Tony. Ill check back tomorrow .Mark
Expert:  TonyTax replied 6 months ago.

You sold the property in August 2015 for £119,500, £59,750 each. You can deduct the costs of purchase and sale (legal fees, stamp duty, survey fees, selling agent fees) in computing the gain.

Here are the figures you need:

BEV

Gain: £42,250 (£59,750 - £17,500 (50% of £35,000)

Total period of ownership to August 2015: 204 months

Period of owner occupation: 22 months

Period of letting: 175 months

Period of vacancy: 7 months?

Exempt gain: £8,284 (£42,250 / 204 months x 40 months (22 months + last 18 months of ownership)

Letting period gain: £33,966 (£42,250 / 204 months x 164 months (175 months - 11 of last 18 months of ownership)

Vacant period gain: £0 (£42,250 / 204 months x 0 months (7 months - 7 of last 18 months of ownership)

Gross Non-Exempt Gain: £33,966

Letting Relief: £8,284 (lesser of £40,000, £8,284 and £33,966)

Annual CGT Exemption: £11,000

Net Taxable Gain: £14,682

CGT @ 18% or 28% or a combination of the two rates depending on the level of your income in 2015/16. Look here to see how to calculate your CGT rate or combination thereof.

MARK

Gain: £34,750 (£59,750 - £25,000 (50% of £50,000)

Gross Non-Exempt Gain: £34,750

Annual CGT Exemption: £11,000

Net Taxable Gain: £23,750

CGT @ 18% or 28% or a combination of the two rates depending on the level of your income in 2015/16. Look here to see how to calculate your CGT rate or combination thereof.

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

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15840
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 6 months ago.
Thank you Tony.
That's very clear and helpful. Much appreciated. Mark.
Expert:  TonyTax replied 6 months ago.

Thanks.

Customer: replied 6 months ago.
Hi TonyJust to confirm. I assume I don't qualify for any reliefs as I wasn't married at the time of transfer of the asset ?Many thanksMark
Expert:  TonyTax replied 6 months ago.

That's correct. You also weren't living there at the time of the transfer.

Customer: replied 6 months ago.
Thanks TonyDarn it... should have timed that a little better .Many thanksMark
Expert:  TonyTax replied 6 months ago.

Many people make that mistake. Here is the law on it.

Customer: replied 6 months ago.
Thanks for your help Tony.I calculated property value using the Land Registry tool here http://landregistry.data.gov.uk/app/ukhpi/exploreJust enter purchase date and valuation date and use the House Price Index figures.Calculation is Purchase price divided by Index on date purchased. Multiplied by index on date of valuation.You probably know this but thought it may help.RegardsMark
Expert:  TonyTax replied 6 months ago.

Thanks.

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