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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am selling a by to let property for £240000 I purchased in

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I am selling a by to let property for £240000 I purchased in 2007 for £110000 the mortgage is 107k it is ex local authority double glazing and other improvements have been made by council to which 15k will be deducted from the proceeds. I also spent 6k on improvements before renting. My current income is 34k. Sale will take place around June of next year 2016. What will be my liability for CGT approx please. It is in my single name.

You say that the sale will take place around June of next year 2016. Do you mean June 2015? Can you let me know the month in 2007 you bought the property, whether it has ever been your main during your ownership of it and if so, the period you lived in it (from, month and year, to, month and year, the month and year you started letting it and whether it will remain let until you sell it.
Customer: replied 3 years ago.

Hi Sorry I meant 2015, Purchased in October 2007, Let out from Jan 2008, has not been my main. It will remain let until sale, thanks


Leave this with me while I draft my answer.

Hi again.

If you sell the property (I'm assuming this is not a furnished holiday let) in June 2015, you will make a gain of £109,000 (£240,000 - £110,000 - £15,000 - £6,000). You can also deduct the costs of buying and selling (legal fees, survey fees, stamp duty, selling agent fees etc) to reduce the gain further. HMRC may ask to see proof of the improvement expenditure.

The first £11,100 of gains made by an individual in 2015/16 will be exempt from Capital Gains Tax so that will leave you with a taxable gain of £97,900. The sum of the basic rate tax band and the basic personal allowance for 2015/16 is planned to be £42,285 (£31,785 + £10,500) and if you deduct your annual income from that, you are left with £8,285 of the lower rate tax band. So, £8,285 of the taxable gain will be charged to CGT at 18% (£1,491.30) and £89,615 will be charged to CGT at 28% (£25,092.20).

Your CGT liability will be £26,585.30 (£1,491.30 + £25,092.20) and this will be payable on 31 January 2017.

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

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