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TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Property gifted to myself and brother in equal shares on 9

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Property gifted to myself and brother in equal shares on 9 August 1989. Base value for CGT £117,500.
Brother lived solely in property until 9 August 1989 after which I too moved there. Brother died 05 August 2012. Property transferred to me. Value at probate £475,000.
I continued to lived solely in the property as my principal residence until date of sale 18 December 2014 after which it was sold for £800,000.
The problem is calculating the capital gain. (To simply calculations I have not deducted all allowable expenses) as two possible calculations arise:
If you use the date of sale.
Sale price 18/12/14 £400,000
Less : Purchase Cost 09/08/89 £58,750
Capital gain £341,250
However by using the date of transfer ie amount for probate.
50% Probate value 05/12/2012 237,500
Less : Purchase Cost 09/08/89 £58,750
Capital gain £178,750
Obviously two very different results which impact the amount of actual tax less allowances that are to be paid.
Question - which is the correct basis of calculation?
Irrespective of the above can I claim the last 18 months exemption in addition to the time I was actually living in the property ie 9 August to 18 December 2014?
Hi. Your base cost for Capital Gains Tax purposes is the sum of half the value of the property in August 1989 and half the value in August 2012 which comes to £296,250 (£58,750 + £237,500). You sold it for £800,000 so you made a gain before deduction of sale expenses of £503,750. You can claim exemption from CGT for that part of the gain covered by the period that it was occupied by you as your main home and that part of the gain covered by the last 18 months of ownership. I hope this helps but let me know if you have any further questions.
You don't double count months. If you were living in the property for the last 18 months of ownership, that part of the gain is exempt from CGT as is the gain for any part of the period of ownership that you owned the property during which it was occupied by you. You don't get another 18 months tax free gain if the last 18 months is exempt in any event.
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