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Capital gains tax

kaz13
kaz13 Posts: 35 Forumite
in House buying, renting & selling
Can someone please tell me, which forum to post a question about how much capital gains tax, we need to pay on selling our house, we used to live in and own to our son, he has lived thereall his life, but the last ten years on his own after we inherited another house and moved out ?

Comments

  • G_M
    G_M Posts: 51,977 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    This forum.

    Value of property 10 years ago when you moved out?

    Value today? (not sale price if you are selling to son at below market value).

    https://www.gov.uk/topic/personal-tax/capital-gains-tax
  • antrobus
    antrobus Posts: 17,386 Forumite
    kaz13 wrote: »
    Can someone please tell me, which forum to post a question about how much capital gains tax, we need to pay on selling our house, we used to live in and own to our son, he has lived there all his life, but the last ten years on his own after we inherited another house and moved out ?

    No, unless you provide numbers and dates.:)

    As I understand things, it works this way,

    You bought a house in XXXX year and paid £A
    You sold a house in YYYY year and received £B

    Your capital gain is £B - £A which accrued over Z years

    You claim Private Residence Relief for the years in which the house was your main home, before you moved into that inherited property and made that your main home, plus the last 18 months.

    So the capital gain would be apportioned over time, roughly 8.5 years divided by Z years. You have a CGT allowance of £11,300. Anything over that and you pay 18%.

    Of course, I don't really do tax, and someone else might know better. Paying a proper accountant for advice is an option.
  • kaz13
    kaz13 Posts: 35 Forumite
    We bought the house in 1985 for £40,000 - we lived in it until 2006, we have sold it to our son for £150,000 but have gifted him £50,000. Towards it.
    Can you work out roughly what you think the tax should be ?
    It seems very confusing
  • kaz13
    kaz13 Posts: 35 Forumite
    The market value was £150,000 then the gift so be pays £100,000.
  • kaz13
    kaz13 Posts: 35 Forumite
    We are both self employed, own our own business, we fill tax returns in and pay tax etc.,
  • Keep_pedalling
    Keep_pedalling Posts: 16,620 Forumite
    First Anniversary First Post Name Dropper Photogenic
    Does letting relief apply if you let a relative live in the property rent free?
  • kaz13
    kaz13 Posts: 35 Forumite
    I have been on the government website - but it is so so confusing, and doesn't seem to ask the right questions, or give any figures!
    I've tried to work it out with the details above, but don't understand it proper - sorry.
    Thank you all for your help.
  • silvercar
    silvercar Posts: 46,957 Ambassador
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    kaz13 wrote: »
    The market value was £150,000 then the gift so be pays £100,000.

    For CGT purposes it counts at market value, as you are related.

    SO you have a gain of £110k.

    You have owned it for 32 years of which 21 years it was your PPR. So you are exempt for 22.5 of the 32 years (PPR + last 18 mths).

    So roughly £32.6k is subject to CGT. That would be £16.3k for you and your spouse.

    You each have a CGT allowance of £11.3k leaving £5k to be taxed for CGT. Tax rates are 18% or 28% depending on your other income.
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • silvercar
    silvercar Posts: 46,957 Ambassador
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    G_M wrote: »
    This forum.

    Value of property 10 years ago when you moved out?

    Value today? (not sale price if you are selling to son at below market value).

    https://www.gov.uk/topic/personal-tax/capital-gains-tax

    Value when you moved out is irrelevant. The gain is assumed to be linear between when you bought and when you sold.
    Keep_pedalling wrote: »
    Does letting relief apply if you let a relative live in the property rent free?

    Don't think so. If you aren't receiving a rent, then the property isn't let in the commercial sense.
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • kaz13
    kaz13 Posts: 35 Forumite
    silvercar wrote: »
    For CGT purposes it counts at market value, as you are related.

    SO you have a gain of £110k.

    You have owned it for 32 years of which 21 years it was your PPR. So you are exempt for 22.5 of the 32 years (PPR + last 18 mths).

    So roughly £32.6k is subject to CGT. That would be £16.3k for you and your spouse.

    You each have a CGT allowance of £11.3k leaving £5k to be taxed for CGT. Tax rates are 18% or 28% depending on your other income.
    This Makes sense, thank you.
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