A capital gains tax property sale question

[heebeegeetee]

Hi all, looking for advice from the great & good.

In approx 1984 wife and I bought a flat as our first home.

10 years later we bought and moved to our next home, keeping the flat as a rental property.

We have now decided to sell the flat.

We understand we would need to pay capital gains tax, but how is this calculated? Is the value when we bought the flat used to calculate, or the value when it ceased to be our main home, or what?

Is there an allowance for property maintenance, and can we include mortgage costs/interest etc (I've been told no to the latter). Or the service charge we've paid per annum?

Grateful for any advice, TIA.

ETA Apologies if this should be in Finance.

Edited by heebeegeetee on Tuesday 21st March 16:35

[heebeegeetee]

Many thanks for the replies guys, I wasn't aware of the online calculator.

I think we're going to be in for some tax, due to buying a property in 1984 and selling in 2023.

I understand I can't include mortgage payments, which annoys me because obviously that's what we actually paid. If I'm taxed on the purchase price then I'm paying tax on money I never had.

Is there any strategies I can use? Can I offshore it?

Forgive the basic questions guys, this is new territory for us.

[heebeegeetee]

Eric Mc said:

OP - YHM

Ah, apologies, have just seen this. Can I call you tomorrow am, if that's ok?

[heebeegeetee]

bennno said:

Surely you already offset the mortgage interest against the rental income received each year from 1994 through to 2021?

Plus if you owned from 94 to 23 and lived in it for 10 of those 29 years, youd get relief against approx 10/29th's of the capital gain.

Do you have an accountant?

Edited by bennno on Wednesday 22 March 10:21

Not any more, having sold business and retired in 2019. Am just about to take financial advice on pension, I may be able to use them.

[heebeegeetee]

Eric Mc said:

zbc said:

Sorry I was suggesting that you make it your main residence again. Like I said you would have to be serious. Move back in, start renting out your current main residence, live there I would suggest at least a couple of years and then sell it. Any suggestion that you are doing it to avoid tax would invite HMRC attention of course but if you have a legitimate reason, such as a new job then I don't see the issue. Of course, having spent the past 10 years living in your typical PH mansion you may not see the attraction of moving back into your student flat but then you just have to pay up like I've just had too.

If you genuinely move back in AND it really becomes your main residence again, then you include the second period of occupancy when you are working out the total number of days it was your main residence.

For a property to become your main residence however, just moving in may not be enough to establish that fact.

I imagine that would involve changing addresses on bank accounts and other forms of account. I guess it's all doable but I know my wife would be uncomfortable with this so I don't foresee us doing this, but thanks for the suggestion anyway.