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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5147
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have been left a house which is not my main residence. The

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I have been left a house which is not my main residence. The house has been valued at £155000-00 if sold as it is and £190000-00 if refurbished. The cost of the refurb would be £20000-00 appr. My income is less than £30000-00 pa. I would like to know the implications regarding C.G.T.and whether it is worth spending the money on the property to bring it into the higher price bracket.
Hello and welcome to the site. Thank you for your question.
Please advise value of property at the time it was left for you.
Is it in joint names?
Many thanks
Customer: replied 3 years ago.

The value of the property is £155000-00, it has only recently been left me, this year. The property is not in joint names. I would like to know how much capital gains tax I would pay if I sold it at that price and I would like to know how much capital gains tax I would pay if I sold it at the higher price of £190000-00, bearing in mind that I would have to spend £20000-00 in order to get the higher price.

Steve, thank you for your reply.

If you were to sell the property as is, there appears to be no increase in value and therefore no gain and no capital gains tax payable.

if you were to spend £20,000 on improvements and then sell it for say £190,000 then your gain is £15,000. You would claim gains allowance of £11,100 (current tax year) and the balance of £3,900 would be chargeable to CGT at 18%, 28% or a combination of two, depending on your total taxable income in the year of sale. As your income is in the region of £30,000, CGT rate of 18% applicable.

CGT payable £702 (a very good return on £20,000 of investment).

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.

Does it make a difference that the house is empty, that is, I live somewhere else, I thought that capital gains tax would apply if I sold a house that was not my main residence.

Steve, thank you for your reply.
Gain from sale of property is chargeable to CGT. If the property is your main residence then you claim private residence relief against the gain and this may cover the whole gain and therefore no CGT payable. You have to live in the property for it to qualify as main residence.
If the property is not your main residence, then the whole gain is chargeable to CGT. The only allowance available is the annual gains allowance, the balance is taxedat CGT Rate of 18%, 28% or combination of both as previously advised.
In your scenario, if you sell the property without improvements then there is no gain and no CGT payable.
I hope this is helpful.
If you are happy and have no more issues, I would appreciate if you would kindly rate/accept the service I have provided so that I am credited for it. and other Tax Specialists are ready to help you
I thank you for accepting my answer.
Best wishes.