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rakhi.v, Financial Advisor
Category: Tax
Satisfied Customers: 4550
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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To give you more details, my wife owned the house from 1985

Customer Question

To give you more details, my wife owned the house from 1985 to the present day but she would like to sell it now. She lived in the house and it was her main and only residence from 1985 until 1993. In 1993 she moved into the house which I purchased and her name was put on the mortgage as well as my name. Her mother continued living in my wife's house and paid rent (approx £300 per month) right up until her death in 2010. My wife has spent approx £18000 on her house (new drive, patio, garage doors, double glazing, and recently re-wiring, new glazed back door, new french doors, new kitchen etc). She needs to declare the rent to HMRC though I think it would have been below the threshold for tax. Could you give me a rough idea of the amount of CGT she will pay assuming the house sells for £300,000 roughly.
Submitted: 4 years ago.
Category: Tax
Expert:  rakhi.v replied 4 years ago.
Dear Friend,

Hello and welcome. Thank you for providing us opportunity to help you.

Let me come straight to your question. IF you need to know how much capital gaix that your wife may incur if she sells her proprety for 300,000 would depend on many factors and you will have to work it out in the following manner.

1. To begin with, you will have to know your value of that property in 1983. That means, we need to know the basis -- the cost of that property to your wife.

2. You will add to that ALL the expenses (made solely for the purpose of increase .and / or preservation of value of the property to it.)

For exampla, if the market price of the property when your wife bought it in 1983 is 100,000 and she has made expenses of, say for example, 25,000 on it, then your cost basis for this property would be 100,000+25,000=125,000. If this sells for 300,000, then the gains on this property would be 300,000-125,000=175,000 -- Capital gains would be 28% of this amount of 175,000.

The following is a step-by-step guide to help you arrive at the capital gains calculation.

I am sure this would help. Please feel free to revert back with a reply if you need more assistance on this.

Warm Regards