Capital gains tax on property
Discussion
Any property tax experts out there?
We (me and the wife) bought a house in 1997 for £125K, spent £25K on an extension and lived there 11 years until 2008.
We then wanted to move to another area, we were not able to sell the house (now worth £350k) so we put it up for rent and have been letting it for the last 2 years.
If we sold it after the 3 year ex-main residence rule, would we have to pay CGT on the difference in value? I.e. 18% of 350K - (125K + 25K) ? So about a £36K tax bill
Thanks
We (me and the wife) bought a house in 1997 for £125K, spent £25K on an extension and lived there 11 years until 2008.
We then wanted to move to another area, we were not able to sell the house (now worth £350k) so we put it up for rent and have been letting it for the last 2 years.
If we sold it after the 3 year ex-main residence rule, would we have to pay CGT on the difference in value? I.e. 18% of 350K - (125K + 25K) ? So about a £36K tax bill
Thanks
Edited by garycat on Wednesday 26th January 13:43
No you won't.
Speak to a financial expert as we did this a few years ago and saved ourselves £10k by paying him £250.
Basically, it's worked out by the difference in sale and purchase value, minus any works done, divided by how many years owned. The number of years lived there is than taken into account, and the 3-year 'getout' factor. Then you are allowed a joint tax code of around £7k a year, plus an index linking every year. The taxible amoun is then a %age of this figure. Therefore you will end up paying far less than you might think!! If you just estimate to the tax office an amount, they will gladly accept it and keep quiet!!!
Speak to a financial expert as we did this a few years ago and saved ourselves £10k by paying him £250.
Basically, it's worked out by the difference in sale and purchase value, minus any works done, divided by how many years owned. The number of years lived there is than taken into account, and the 3-year 'getout' factor. Then you are allowed a joint tax code of around £7k a year, plus an index linking every year. The taxible amoun is then a %age of this figure. Therefore you will end up paying far less than you might think!! If you just estimate to the tax office an amount, they will gladly accept it and keep quiet!!!
Get proper advice but broadly:
If you owned it for 12 years as an example, lived in it for 8, you would then add the other 3 years on, giving a total of 11 years. The gain is time apportioned and you would therefore have 1/12 of the overall uplift chargeable to CGT, but at 28% not 18%.
If you owned it for 12 years as an example, lived in it for 8, you would then add the other 3 years on, giving a total of 11 years. The gain is time apportioned and you would therefore have 1/12 of the overall uplift chargeable to CGT, but at 28% not 18%.
OP you are my double - similar situation 
My hitherto understanding was that the liability would be based upon, valuation of property at the time you moved out +/- valuation on sale date, liability is then due on the difference. NOTE: If sold within 3 years of you "moving out", different criteria apply.
Naturally, I will be taking advice nearer to the time. Should it mean that I have to move back in for x months, then so be it.
Now that the "senoior moment" has passed.....look up PPR - Principle Private Residence and also Lettings Relief.
This thread be may better in Finance or even Business?
My hitherto understanding was that the liability would be based upon, valuation of property at the time you moved out +/- valuation on sale date, liability is then due on the difference. NOTE: If sold within 3 years of you "moving out", different criteria apply.
Naturally, I will be taking advice nearer to the time. Should it mean that I have to move back in for x months, then so be it.
Now that the "senoior moment" has passed.....look up PPR - Principle Private Residence and also Lettings Relief.
This thread be may better in Finance or even Business?
Edited by T5R+ on Thursday 27th January 09:52
garycat said:
Any property tax experts out there?
We (me and the wife) bought a house in 1997 for £125K, spent £25K on an extension and lived there 11 years until 2008.
We then wanted to move to another area, we were not able to sell the house (now worth £350k) so we put it up for rent and have been letting it for the last 2 years.
If we sold it after the 3 year ex-main residence rule, would we have to pay CGT on the difference in value? I.e. 18% of 350K - (125K + 25K) ? So about a £36K tax bill
Thanks
Assuming it's owned jointly, and saying for example you sold it after 15 years of ownership:We (me and the wife) bought a house in 1997 for £125K, spent £25K on an extension and lived there 11 years until 2008.
We then wanted to move to another area, we were not able to sell the house (now worth £350k) so we put it up for rent and have been letting it for the last 2 years.
If we sold it after the 3 year ex-main residence rule, would we have to pay CGT on the difference in value? I.e. 18% of 350K - (125K + 25K) ? So about a £36K tax bill
Thanks
Edited by garycat on Wednesday 26th January 13:43
Gain = £350k less (£125k+£25k) = £200k.
Allowance for main residence = £200k x residence (11 + 3)/ownership (15) = £186667.
Taxable gain = £200000 less £186667 = £13333, which assuming it's owned jointly and you have no other capital gains in the year, would be more than covered by your annual allowance (currently £10100 each). So in this instance, nothing to pay.
LeighW said:
garycat said:
Any property tax experts out there?
We (me and the wife) bought a house in 1997 for £125K, spent £25K on an extension and lived there 11 years until 2008.
We then wanted to move to another area, we were not able to sell the house (now worth £350k) so we put it up for rent and have been letting it for the last 2 years.
If we sold it after the 3 year ex-main residence rule, would we have to pay CGT on the difference in value? I.e. 18% of 350K - (125K + 25K) ? So about a £36K tax bill
Thanks
Assuming it's owned jointly, and saying for example you sold it after 15 years of ownership:We (me and the wife) bought a house in 1997 for £125K, spent £25K on an extension and lived there 11 years until 2008.
We then wanted to move to another area, we were not able to sell the house (now worth £350k) so we put it up for rent and have been letting it for the last 2 years.
If we sold it after the 3 year ex-main residence rule, would we have to pay CGT on the difference in value? I.e. 18% of 350K - (125K + 25K) ? So about a £36K tax bill
Thanks
Edited by garycat on Wednesday 26th January 13:43
Gain = £350k less (£125k+£25k) = £200k.
Allowance for main residence = £200k x residence (11 + 3)/ownership (15) = £186667.
Taxable gain = £200000 less £186667 = £13333, which assuming it's owned jointly and you have no other capital gains in the year, would be more than covered by your annual allowance (currently £10100 each). So in this instance, nothing to pay.
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