Capital gains tax on property help!! please

When the house is sold you need to declare it on a tax return. I would guess that keeping it in joint names - two people declaring it on a two tax returns with £8,500 personal C.G.T. allowance each, would be better than one.

To work out the C.G.T deduct the purshase price, and purchase costs (stamp duty, solicitors & surveyors fees and anything else you've got a receipt for to do with the purchase) and the sale costs (same sort of stuff plus estate agent & advertising fees) from the profit. You can also deduct anything else spent on improving the property - but not ordinary maintenance costs. (Don't you wish you'd kept your receipts?)

Then using Taper Relief only 80% of the gain will be chargable (after 6 years). Presumably at half each (I'm guessing that 'joint' means two of you) & taxed at 20% for amounts over £8,500.

You want further reductions?

Capital losses - have you (or 'joint' owner) any of these? Going back as far as you like. As long as you've got proof. If occuring before March 1998 these can be made even greater by indexing against the Retail Prices Index (talk to an accountant). Capital Losses (from anytime ago) can be offset against gains. You must have lost money on shares at sometime - bet you didn't keep the paperwork...

Main Home - if, at any time, Second Property has been your main home then that time would qualify for "private residence relief" (i.e. tax free) and also the final three years. So if one of the 'joint' owner originally lived there then they should probably be the one(s) selling it -

But - if you are not married to 'joint' (or a registered civil partner) there'll be C.G.T. to pay on any profit when names are altered on deeds to put it into one name. (Gifts between spouses being tax free).

In all, if you really know nothing about tax, it would probably pay to get an accountant to do your tax return. But check first that they're really keen to reduce your tax bill. (We pay far less tax since I ditched the accountant) (Legally too).

You are responsible for getting a tax return - if you haven't sold the property yet you need not declare it until after the end of the tax year.

You don't have to have an accountant if you've got the time & interest to sort it out yourself - there are many simple books which will help - The Daily Mail 2005-6 Tax Guide gives you all the tips you need and has examples of how to fill in the form. You may even find how to save tax in other areas of your life.

More tax savings...

You say you don't work - but if you are under 75 and a higher rate tax payer & if you have income other than from investments e.g. rent - then you may be able to make a pension contribution to reduce you into the 20% CGT bracket.

(My mother just saved over £20K on CGT alone by this move...)

No - I think gifts of property would trigger a Capital Gains Tax payment in themselves - even without a sale. We looked into putting some rented property of my mother's into my name (+ my sisters) to count as a PET (exempt from Inheritance Tax after 7 years) but found that my mother would need to get the money from somewhere to pay tax as if she'd sold it to us at the market rate.

So adding a couple of children, as you say, would have been a good idea when it was first bought - before it had made any capital gains.