Capital Gains Tax on property - question.

[andy400]

Been trying to find the CGT rules online but have failed so far. I am trying to confirm my thoughts - based on my fading memory of CGT - that I won't owe any tax on the equity in a property I am considering offloading.

Will have had the house for 7 years when it will be sold (prediction, tbc!).

It was originally my primary residence for 2 years, before I moved and rented it out.

Thanks for any help.

[rev-erend]

I think you need to have lived there for past 6 month before the sale .. to avoid CGT.

[andy400]

rev-erend said:

I think you need to have lived there for past 6 month before the sale .. to avoid CGT.

I think there's a lot more to it than that.

[siscar]

If you have had it for seven years and rented it out for five it won't qualify for private residence relief. For that you can discount the last three years but otherwise it had to be your private residence and if you were renting it out it doesn't qualify.

The first £10,100 of any gain is exempt then you can and you can deduct some costs of buying, selling and improving it but beyond that you will be liable for CGT.

[dirty boy]

andy400 said:

Been trying to find the CGT rules online but have failed so far. I am trying to confirm my thoughts - based on my fading memory of CGT - that I won't owe any tax on the equity in a property I am considering offloading.

Will have had the house for 7 years when it will be sold (prediction, tbc!).

It was originally my primary residence for 2 years, before I moved and rented it out.

Thanks for any help.

As the house has been your private residence at some point, the last 36 months also qualify as your private residence.

In your case only 2/7ths of the gain will be taxable, although you may be entitled to other reliefs depending on various circumstances.

As already noted though, the gains exemption in 09/10 is £10,100, double if held in joint names.

[andy400]

dirty boy said:

andy400 said:

Been trying to find the CGT rules online but have failed so far. I am trying to confirm my thoughts - based on my fading memory of CGT - that I won't owe any tax on the equity in a property I am considering offloading.

Will have had the house for 7 years when it will be sold (prediction, tbc!).

It was originally my primary residence for 2 years, before I moved and rented it out.

Thanks for any help.

As the house has been your private residence at some point, the last 36 months also qualify as your private residence.

In your case only 2/7ths of the gain will be taxable, although you may be entitled to other reliefs depending on various circumstances.

As already noted though, the gains exemption in 09/10 is £10,100, double if held in joint names.

Ok, thanks. So bearing in mind that it is Friday afternoon and my head hurts -

If I was to walk away with 50k after fees (for example) 10,100 is tax-free, then I have to give the tax-leeches 2/7ths of the rest, so the tax would be 11400 (2/7ths of 39900) or thereabouts? Do I understand correctly?

If so, bdS!!!!

(But if I put into joint names now, to get 20,200 tax-free, how long before I can sell it?)

[dirty boy]

andy400 said:

dirty boy said:

andy400 said:

Been trying to find the CGT rules online but have failed so far. I am trying to confirm my thoughts - based on my fading memory of CGT - that I won't owe any tax on the equity in a property I am considering offloading.

Will have had the house for 7 years when it will be sold (prediction, tbc!).

It was originally my primary residence for 2 years, before I moved and rented it out.

Thanks for any help.

As the house has been your private residence at some point, the last 36 months also qualify as your private residence.

In your case only 2/7ths of the gain will be taxable, although you may be entitled to other reliefs depending on various circumstances.

As already noted though, the gains exemption in 09/10 is £10,100, double if held in joint names.

Ok, thanks. So bearing in mind that it is Friday afternoon and my head hurts -

If I was to walk away with 50k after fees (for example) 10,100 is tax-free, then I have to give the tax-leeches 2/7ths of the rest, so the tax would be 11400 (2/7ths of 39900) or thereabouts? Do I understand correctly?

If so, bdS!!!!

(But if I put into joint names now, to get 20,200 tax-free, how long before I can sell it?)

Not quite, you've just calculated the gain. If you're a higheer rate tax payer the liability will be about £4.5k, half that if you're at basic rate.

If you transfer half to your spouse then she'll take on the same base cost as you, and you'll get the extra allowance and possibly no tax to pay, but you'll have to pay legal fees to do so.

If it's not your spouse, then that's entirely different.

[dirty boy]

andy400 said:

I put into joint names now, to get 20,200 tax-free, how long before I can sell it?

The next day.

[andy400]

dirty boy said:

andy400 said:

dirty boy said:

andy400 said:

Been trying to find the CGT rules online but have failed so far. I am trying to confirm my thoughts - based on my fading memory of CGT - that I won't owe any tax on the equity in a property I am considering offloading.

Will have had the house for 7 years when it will be sold (prediction, tbc!).

It was originally my primary residence for 2 years, before I moved and rented it out.

Thanks for any help.

As the house has been your private residence at some point, the last 36 months also qualify as your private residence.

In your case only 2/7ths of the gain will be taxable, although you may be entitled to other reliefs depending on various circumstances.

As already noted though, the gains exemption in 09/10 is £10,100, double if held in joint names.

Ok, thanks. So bearing in mind that it is Friday afternoon and my head hurts -

If I was to walk away with 50k after fees (for example) 10,100 is tax-free, then I have to give the tax-leeches 2/7ths of the rest, so the tax would be 11400 (2/7ths of 39900) or thereabouts? Do I understand correctly?

If so, bdS!!!!

(But if I put into joint names now, to get 20,200 tax-free, how long before I can sell it?)

Not quite, you've just calculated the gain. If you're a higheer rate tax payer the liability will be about £4.5k, half that if you're at basic rate.

If you transfer half to your spouse then she'll take on the same base cost as you, and you'll get the extra allowance and possibly no tax to pay, but you'll have to pay legal fees to do so.

If it's not your spouse, then that's entirely different.

Ah, of course, 40% of the 2/7ths of the rest. Friday afternoon!

Not so bad then, though they're still bds.

I'm thinking the legal fees will only be a couple of hundred maybe, compared with the benefit of saving a bucket load of tax this seems like a good move.

What about the fact that the wife is no longer a higher rate tax-payer?

[dirty boy]

Sorry, Friday afternoon

The relief is before your allowance

So £50k

Restricted to 2/7ths

£14285

Less £10100

£4185 @ 18% (it's flat rate across the board now)

£753

You may also have expenses incurred in aquiring the property to add, improvements etc.

[andy400]

dirty boy said:

Sorry, Friday afternoon

The relief is before your allowance

So £50k

Restricted to 2/7ths

£14285

Less £10100

£4185 @ 18% (it's flat rate across the board now)

£753

You may also have expenses incurred in aquiring the property to add, improvements etc.

So 18% no matter that I'm higher rate?

Many Thanks BTW.

[Jgtv]

If you have an accountant ask them, its not exactly that simple there are a lot of other things to include.

Also remember that as you have put the capital gains down I wouldn't be surprised if they ask you about the income you have made on the rental side of things these last few years, potentially sticking you with a tax bill if your not smart that could end up with a tax bill coming your way to.

Go see an accountant, if you don't have one get a personal recommendation to one DON'T just pick the first one out of the book.

[Wings]

Do you have a partner, if so is the house in just your name or joint names?

Since ownership have you not spent money on improving the property, I do not mean repairs, I me new windows, doors, patio, garage, drive etc. etc.

In the South West. any where nice then?

[andy400]

Wings said:

In the South West. any where nice then?

Central Plymouth, but one of the better areas.