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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hello - how much do you charge for advice on CGT on selling

Customer Question

Hello - how much do you charge for advice on CGT on selling a property that we lived in/rented out and now plan to sell?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.

I'd be happy to do the calculations if you can let me have the following information:

1 When was the property bought (month and year) and what did it cost to buy?

2 Did you move in right away? When did you move out (month and year)?

3 Was the property let as soon as you moved out? Has it been let or available to let continuously since?

3 How many people are part owners of the property?

4 What is the value of the property now?
Customer: replied 3 years ago.

June 1991 - 61K

Yes moved in right away

Jan 2005 - moved out

Yes - let all the time except during renovations (2 months)

Joint names - bought before we were married

Had offer of 380k

Expert:  TonyTax replied 3 years ago.


Leave this with me while I do some calculations and draft my answer. I've reported the duplicate question and you will be refunded for that one.

Customer: replied 3 years ago.

Many thanks, I will be looking at it tomorrow.

Expert:  TonyTax replied 3 years ago.
Hi again.

If you sell the property in July 2014 for £380,000 you will make a gain of £281,000 (£380,000 - £61,000 - £12,000 - £8,000 - £18,000). That's £140,500 for each of you and your husband. By that time you will have owned it for 278 months of which you lived in it for 164 and let it for 114. The following figures are for each of you individually:

The gain for the period the property was your main home will be exempt from CGT as will the gain for the last 18 months of ownership. That accounts for £91,982 (£140,500 / 278 x 182). The remaining gain of £48,518 is that part of the letting period gain which is not covered by the last 18 months of ownership (£140,500 / 278 x 96). As the property was both your main home and it was let you are entitled to a further deduction from the gain called letting relief which is the lesser of:

1 £40,000,

2 the sum of the main residence gain and the gain for the last 18 months of ownership of the property which is £91,982 and

3 the letting period gain of £48,518.

Letting relief of £40,000 will reduce the remaining gain from £48,518 to £8,518 and the annual CGT exemption of £11,000 will cover the balance of £8,518 so there should be no CGT to pay.

You will each need to disclose the figures in a tax return. The tax office could ask to see proof of improvement expenditure in the form of receipts and invoices and may disallow any which you cannot prove. Expenditure on regular repairs should have been claimed against rental income and only the costs of improvements should be claimed in the calculation of the gain.

I hope this helps but let me know if you have any further questions.
Customer: replied 3 years ago.

Many thanks

Expert:  TonyTax replied 3 years ago.