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Sam, Accountant
Category: Tax
Satisfied Customers: 7510
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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My husband and I bought house in March 2004. We bought for

Customer Question

My husband and I bought house in March 2004. We bought for 235k. Our mortgage is 208k. We bought and moved into another property in oct 2011. We rented out the first property for 1400 pm. We had permission to rent from existing mortgage company. We did declaration of trust for first property so all rentals incomes etc is taxed to my tax allowance as on low income as work part time. It was valued in 2011 for 295k. We've now want to sell first property and hoping to sell for approx 410k. What are our cgt implications please.
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer. As the property is in joint names then you should have declared the rental income as 50:50 unless you had proof that you contributed a higher amount to the purchase and maintaining on this rented property to substantiate the declaration of trust.As I assume this is the case, then you also are fully liable to the capital gains which will be the sale value less the purchase value - so approx £175K - from which you can deduct the costs to buy and sell and any capital improvements carried out on the property. Then tax reliefs are applied - private residence relief for the time that you lived there (plus the last 18 months of ownership) and after then private lettings relief which is the lesser of 1) the amount of gain on which private residence relief is due2) the amount of gain left over after private residence relief has been applied OR3) £40,000 Then with the gain left over the first £11,100 is exempt as this is your annual exemption allowance.Any remaining gain is then liable to either 18% or 28% capital gains tax or a mix of both. You should alert HMRC to the sale once it has taken place, and then declare the gain on the year end tax return - any tax due will be then payable no later than the following 31st Jan. Let me know if I can assist further Thanks Sam