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bigduckontax, Accountant
Category: Tax
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Hi Please calculate my overall CGT liability if I were to

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Please calculate my overall CGT liability if I were to sell the following four properties in the current tax year. Thank you.
Ref Date Use
No 10 29/07/2003 Let until 11/11/2012
but since then my main residence
No 8 19/07/2003 Let for entire period to date
No 14 17/06/2002 Let for entire period to date
No 4 10/10/2013 Private holiday home - not let
Ref Purchase Current Gain
Costs Valuation
No 10 £136,148 £175,500 £39,352
No 8 £136,148 £175,500 £39,352
No 14 £101,809 £136,500 £34,691
No 4 £187,913 £180,375 -£7,538
Please also take into consideration:
For 2014-15
My pay from employment £- £-
My Gross dividend receipts £199,606 £49,054
My Other income, rent, pensions etc £33,258 £4,763
Totals £232,864 £53,817
Many thanks and when replying would you please include a note of your qualifications.
Hope to hear from you shortly.

Hello, I'm Keith and happy to help you with your question.

Delighted to help, but unfortunately you have failed to provide one vital bit of data and a bit more would help.

So did you reside in any of these let properties BEFORE you let them out? Also where were you living before you moved into No, 10? Were you in another location because of your employment or were you in job related accommodation?

Please advise me and then I can proceed.

Customer: replied 3 years ago.

Sorry for delay, couldn't work out how to reply, now I know one has to log on... Okay, I did not reside in No 8 or No 14 at any time. I have lived in No 10 only since Nov 12, before that it was always let out. Before I moved into No 10 I lived in another house that has been sold. Thanks.

Right, that was a pity because had you lived in any of those rented houses before letting them out you would have been entitled to Lettings Relief which is worth up to 40K; ah well.
No 10 then was your sole or main domestic residence for a short time. Worked out in months comes to say 25 months. Thus 111/136 of the gain of 39K is taxable, say 32K.
Numbers 8, 14 and 4 are taxable on the full gain, 39 + 35 + 8 = 82k.
Add 82K to 32K [for no 10] and we have 114K taxable less your Annual Exempt Allowance (AEA) of 11K = 103K liable to CGT which, at your income level, would be taxed at 28% = 39K of tax due.
AEA is a 'use it or loose it' allowance so immediately you will see that by holding off sale of some of these assets to next tax year would save you some 3K in tax.
You should be aware that any improvements that you have made to your properties eg extensions, double glazing, installation of central heating etc, but not redecoration and routine maintenance [offset against rentals] should be added to the purchase price to inflate it as also purchase costs thus reducing CGT exposure. Selling prices should be net prices ie excluding costs of sale.
There remains one danger, the short time you have owned no 4 could attract HMRC's attention as to your intention to buy for a quick sale and in such an instance the gain is charged to Income Tax, not CGT. This would push you over 100K in income and you would loose your personal allowance by a quid for every two you go over 100K.
There you are then; I do hope I have pointed you in the right direction and given you some assistance.
Customer: replied 3 years ago.

I just wanted to check that you took into account the following income and tax due figures for the current tax year

Income Tax due

My pay from employment £nil £nil
My Gross dividend receipts £199,606 £49,054
My Other income, rent, pensions etc £33,258 £4,763


Which puts you over the 100K so you will have lost your personal allowance anyway. Your income is so high that your capital gains are charged at 28%, you having exhausted your 20% tax bracket.
Income Tax and CGT are different taxes and only impinge when determining which rate of CGT taxation, 18%, 28% or a combination of the two.
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