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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 10162
Experience:  FCCA FCMA CGMA ACIS
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I need advice regarding capital gains tax on the sale of a

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I need advice regarding capital gains tax on the sale of a property. My wife and I bought her parents bungalow in 2004 and we sold in April, we bought it so that our elderly parents could stay in the property, purchase price was £30,000 sale price £157,000. How can I limit the amoun5 of capital gains tax that I need to pay.
JA: What are the assets or property for this capital gain?
Customer: a bungalow
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able to help you.
Customer: I have started to complete the online capital gains tax submission and I am confused by some of the questions.

When did your parents vacate the property?

Customer: replied 13 days ago.
Father in law died on 23rd January 2020 Mother in law died 7 years ago

This was a gift with reservation so the Capital Gains Tax (CGT) only runs from, in this case, January 2020. Thus only some 1 / 17 = say 6% on any notional gain made is exposed to the tax. In any event you have a non cumulative Annual Exempt Amount (AEA) of 12.3K to offset gains so any liability will me minimal.

I don't do telephone calls any more, they are no longer cost effective.

Customer: replied 13 days ago.
I am completing the form on line and the estimated liability is £26,000. I do not know how to enter gift with reservation

What system are you using?

Customer: replied 13 days ago.
The Giv Gateway
Customer: replied 13 days ago.
The Gov Gateway

Are you sure you have entered data correctly?

Customer: replied 13 days ago.
I think I have entered all the data correctly such as purchase price £30,000, sale price £157,000, amount of AEA £12,300, my salary and tax code for 21/22. The only box that I can see that I have not ticked is for claiming against Private Residence Relief or claiming against other Capital Gains Tax reliefs. When I state yes to the other Capital Gains Tax relief it asks for the name of the relief and the amount of relief, which I do not know how to complete.

Private residence relief from the time you actually acquired the dwellig.

Customer: replied 13 days ago.
It is now asking for the amount of Private Residence Relief entitled to. What amount t would this be?
Customer: replied 13 days ago.
would this be 16/17 of the overall profit i.e. £119,530 taking account of the 1/17 from January 2020 i.e. £7,470

Correct, but I have a shrewd suspicion that this system was never designed to operate this sort of complexity.

Customer: replied 13 days ago.
I have entered this figure and the Capital Gains Tax liability is now £0. Which is good news but I am a little nervous about submitting this form as I do n to understand the Private Residency issue and how it relates to Gift with reservations. My reading of the guidance only allows me to claim if I had been living in the property for a period, it does not mention family members.

And presumably fails to mention that for the last 9 months of ownership you are deemed to be in occupation even if tis is not the case. However, if it is giving you a no liability than accept the position and emulate Brer Fox, 'For he law low and say nuffin!'

bigduckontax and other Tax Specialists are ready to help you
Customer: replied 13 days ago.
Would you advise me to submit the form myself or get a tax advisor to act on my behalf

Your local high street account could do it in aa moment.