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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My wife whilst a single mother purchased her house in 1998

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My wife whilst a single mother purchased her house in 1998 for £82,000 lived in the house until 2005 at which time she rented the house until July 15 2015 appx 10 years.
She is the sole owner of this property and now wishes to sell the property which was poorly looked after during the rental period.
The house was valued at £210,000 what if any capital gains tax would she be eligible for on this sale. She has not worked since 2004, prior to that she was a teacher.
Can you tell me which month in 1998 the house was bought please. Which month in 2005 did she move out? Was the house let more or less continuously until it was sold?
Customer: replied 2 years ago.
The house was purchased in July 1998,she moved out in March of 2005,the house was then let from then appx until July 15th 2015 the house has not been sold yet.
Leave this with me while I do some calculations.
Hi again.
If the house is sold for £210,000 in, say, December 2015, your wife will make a gain of £128,000 (£210,000 - £82,000). The costs of purchase and sale can be claimed against the gain (legal fees, survey fees, stamp duty, selling agent fees etc). By December 2015, she will have owned the property for 210 months of which it was occupied by her for 81, let for 124 and vacant for 5.
The sum of the gains for the period that your wife occupied the property and for the last 18 months of ownership will be exempt from CGT. That accounts for £60,343 (£128,000 / 210 x 99). The remaining gain of £67,657 is that part of the gain for the letting period not covered by the last 18 months of ownership (£128,000 / 210 x 111).
As the property was both occupied by your wife as her main home and it was let, she is entitled to letting relief which will be £40,000 (the lesser of £40,000, £60,343 and £67,657). That will reduce the remaining gain to £27,657 and the annual Capital Gains Tax exemption of £11,100 will reduce it further to leave her with a net taxable gain of £16,557.
As your wife doesn't work and I assume has no income of her own, then she will pay CGT at 18% leaving her with a liability of £2,980.26.
Take a look at HS283 at the link below for more information on the main residence and CGT. s283-self-assessment-helpsheet/hs283-private-residence-relief
I hope this helps but let me know if you have any further questions.
You can find HS283 here:
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