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  • FIRST POST
    • POPPYOSCAR
    • By POPPYOSCAR 14th Sep 17, 7:40 AM
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    POPPYOSCAR
    CGT on 2nd property.
    • #1
    • 14th Sep 17, 7:40 AM
    CGT on 2nd property. 14th Sep 17 at 7:40 AM
    Could anyone tell me if I am working this out correctly please?

    Second property bought 1987 sold 2017 so owned 30 years(360 mths) owned jointly.

    Lived in for 9 years = 111mths

    Rented out 15 years = 180mths

    Bought for £70,000 sold for £600,000( gain £530,000)

    PPR = 111+18 = 129mths 129/360 = 0.358
    35.8% of £530,000 = £189,740

    Letting Relief 180/360 = 0.50
    50.0% of £530,000 = £265,000
    Maximum allowed £40,000 x 2 = £80,000

    PPR £189,740 + LR £80,000= £269,740
    Gain of £530,000 - £269,740 = £260,260
    less CGT allowance x 2 - £ 22.600

    Total chargeable gain = £237,660

    Assuming no other income

    £237,660/2 = £118,830 gain per owner.

    First £33,500 at 18% = £6030
    Balance £85330 at 28% = £23892.40
    Total CGT payable for each owner £29922.40

    Thank you.
    Last edited by POPPYOSCAR; 14-09-2017 at 9:06 AM. Reason: Adjusting Tax band
Page 1
    • Pennywise
    • By Pennywise 14th Sep 17, 7:46 AM
    • 9,340 Posts
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    Pennywise
    • #2
    • 14th Sep 17, 7:46 AM
    • #2
    • 14th Sep 17, 7:46 AM
    Where do you get the £30,000 band of lower rate CGT?
    • POPPYOSCAR
    • By POPPYOSCAR 14th Sep 17, 7:55 AM
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    POPPYOSCAR
    • #3
    • 14th Sep 17, 7:55 AM
    • #3
    • 14th Sep 17, 7:55 AM
    Is that not correct?

    Should it be £45,000?

    I must admit I do find it confusing!
    Last edited by POPPYOSCAR; 14-09-2017 at 8:20 AM.
    • 00ec25
    • By 00ec25 14th Sep 17, 8:25 AM
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    00ec25
    • #4
    • 14th Sep 17, 8:25 AM
    • #4
    • 14th Sep 17, 8:25 AM
    Is that not correct?

    Should it be £45,000?

    I must admit I do find it confusing!
    Originally posted by POPPYOSCAR
    the basic rate tax band if sold before 6 April 2017 is 32,000. Therefore, assuming no income, the amount at 18% in 16/17 would be 32k

    if sold on after 6/4/17 the 18% "band" in 17/18 (assuming no income) would be £33,500

    https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18

    as "assuming no income" is impossible in reality, then for every £1 of taxable other income up to the 32k or 33.5k basic rate band (as applic) you move £1 of gain into the 28% band

    the actual CGT liability calculation is fine, assuming of course your facts are correct, eg. both owners lived there for the full 9 years each
    Last edited by 00ec25; 14-09-2017 at 7:56 PM.
    • POPPYOSCAR
    • By POPPYOSCAR 14th Sep 17, 8:29 AM
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    POPPYOSCAR
    • #5
    • 14th Sep 17, 8:29 AM
    • #5
    • 14th Sep 17, 8:29 AM
    the basic rate tax band if sold before 6 April 2017 was personal allowance 11,000 + 32,000 @ 20% = 43,000
    therefore assuming no income the amount at 18% in 16/17 would be 43k not 30k

    if sold on after 6/4/17 the 18% "band" in 17/18 (assuming no income) would be 45,000 (11,500 + 33,500)

    https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18

    as "assuming no income" is impossible in reality, then for every £1 of taxable other income up to 43k or 45k (as applic) you move £1 of gain into the 28% band
    Originally posted by 00ec25

    Thank you.

    I will amend my post accordingly.

    Do you know if the rest of the calculation is correct?
    • 00ec25
    • By 00ec25 14th Sep 17, 8:34 AM
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    00ec25
    • #6
    • 14th Sep 17, 8:34 AM
    • #6
    • 14th Sep 17, 8:34 AM
    Thank you.

    I will amend my post accordingly.

    Do you know if the rest of the calculation is correct?
    Originally posted by POPPYOSCAR
    LOL i edited my original post as you posted this , yes it is
    • BoGoF
    • By BoGoF 14th Sep 17, 8:40 AM
    • 2,572 Posts
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    BoGoF
    • #7
    • 14th Sep 17, 8:40 AM
    • #7
    • 14th Sep 17, 8:40 AM
    the basic rate tax band if sold before 6 April 2017 was personal allowance 11,000 + 32,000 @ 20% = 43,000. Therefore, assuming no income, the amount at 18% in 16/17 would be 43k not 30k

    if sold on after 6/4/17 the 18% "band" in 17/18 (assuming no income) would be 45,000 (11,500 + 33,500)
    Originally posted by 00ec25

    But the personal allowance cannot be offset against the Capital Gain so only 33,500 would be chargeable at 18%?
    • purdyoaten2
    • By purdyoaten2 14th Sep 17, 8:56 AM
    • 713 Posts
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    purdyoaten2
    • #8
    • 14th Sep 17, 8:56 AM
    • #8
    • 14th Sep 17, 8:56 AM
    the basic rate tax band if sold before 6 April 2017 was personal allowance 11,000 + 32,000 @ 20% = 43,000. Therefore, assuming no income, the amount at 18% in 16/17 would be 43k not 30k

    if sold on after 6/4/17 the 18% "band" in 17/18 (assuming no income) would be 45,000 (11,500 + 33,500)

    https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18

    as "assuming no income" is impossible in reality, then for every £1 of taxable other income up to 43k or 45k (as applic) you move £1 of gain into the 28% band

    the actual CGT liability calculation is fine, assuming of course your facts are correct, eg. both owners lived there for the full 9 years each
    Originally posted by 00ec25
    It is some time since I worked full time as a tax consultant and, as each year goes by, each change renders me more and more useless! But is what you are saying correct?

    The guidance is:

    It works like this:

    Work out how much taxable income you've earned from your salary, pension or other type of income.
    You can do this by deducting your tax-free personal allowance (£11,500 in 2017-18) from your total income.
    Calculate your taxable capital gain by deducting the tax-free CGT allowance (£11,300 in 2017-18) from your profits
    Add your taxable capital gain to your taxable income.

    It certainly used to be the case that, in the case where there was no other income, the calculation would be as follows.

    NIL income from salary, pension etc less personal allowance 11500 = NIL.
    Basic rate band available against Capital Gains £33500.i.e. not £45000.
    So the first £33500 is at 18% ?

    Now, and it happens more and more frequently, I may not have been aware of something as I am not as up to date as I should be.

    Can you confirm?

    Sorry BoGoF - we crossed. So, if I am wrong, I can console myself in knowing that someone else is equally mad!!
    Last edited by purdyoaten2; 14-09-2017 at 9:00 AM.
    purdyoaten lost his password
    • POPPYOSCAR
    • By POPPYOSCAR 14th Sep 17, 9:09 AM
    • 10,829 Posts
    • 22,557 Thanks
    POPPYOSCAR
    • #9
    • 14th Sep 17, 9:09 AM
    • #9
    • 14th Sep 17, 9:09 AM
    But the personal allowance cannot be offset against the Capital Gain so only 33,500 would be chargeable at 18%?
    Originally posted by BoGoF
    Yes you are right.

    I have just put my figures into the Gov website and it showed the tax that would be paid.
    • POPPYOSCAR
    • By POPPYOSCAR 14th Sep 17, 9:16 AM
    • 10,829 Posts
    • 22,557 Thanks
    POPPYOSCAR
    It is some time since I worked full time as a tax consultant and, as each year goes by, each change renders me more and more useless! But is what you are saying correct?

    The guidance is:

    It works like this:

    Work out how much taxable income you've earned from your salary, pension or other type of income.
    You can do this by deducting your tax-free personal allowance (£11,500 in 2017-18) from your total income.
    Calculate your taxable capital gain by deducting the tax-free CGT allowance (£11,300 in 2017-18) from your profits
    Add your taxable capital gain to your taxable income.

    It certainly used to be the case that, in the case where there was no other income, the calculation would be as follows.

    NIL income from salary, pension etc less personal allowance 11500 = NIL.
    Basic rate band available against Capital Gains £33500.i.e. not £45000.
    So the first £33500 is at 18% ?

    Now, and it happens more and more frequently, I may not have been aware of something as I am not as up to date as I should be.

    Can you confirm?

    Sorry BoGoF - we crossed. So, if I am wrong, I can console myself in knowing that someone else is equally mad!!
    Originally posted by purdyoaten2
    Can I ask if my CGT calculations are correct?
    • POPPYOSCAR
    • By POPPYOSCAR 14th Sep 17, 9:17 AM
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    POPPYOSCAR
    But the personal allowance cannot be offset against the Capital Gain so only 33,500 would be chargeable at 18%?
    Originally posted by BoGoF
    I have amended it to £33,500.

    Are the rest of the calculations right please?
    • purdyoaten2
    • By purdyoaten2 14th Sep 17, 9:50 AM
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    purdyoaten2
    I have amended it to £33,500.

    Are the rest of the calculations right please?
    Originally posted by POPPYOSCAR
    They look fine - don't forget to include buying and selling costs!
    purdyoaten lost his password
    • POPPYOSCAR
    • By POPPYOSCAR 14th Sep 17, 10:02 AM
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    POPPYOSCAR
    They look fine - don't forget to include buying and selling costs!
    Originally posted by purdyoaten2
    Thank you.

    Just using approximations to see if I have the basic formula right.
    • Brighty
    • By Brighty 14th Sep 17, 11:46 AM
    • 730 Posts
    • 378 Thanks
    Brighty
    Owned for 30years, lived in for 9, rented for 15, what happend for the other 6 years, empty?
    • POPPYOSCAR
    • By POPPYOSCAR 14th Sep 17, 1:47 PM
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    POPPYOSCAR
    Owned for 30years, lived in for 9, rented for 15, what happend for the other 6 years, empty?
    Originally posted by Brighty
    It was empty for a while before being worked on, then gaps between lettings. Also family and friends lived there rent free when they needed to and it was empty.

    Does this make any difference?
    • Brighty
    • By Brighty 14th Sep 17, 3:00 PM
    • 730 Posts
    • 378 Thanks
    Brighty
    Think the letting period is the total from when you started letting it to when you stopped, so you can still count gaps of a month or 2 between tenants. Maybe, best someone more in the know answers that
    • purdyoaten2
    • By purdyoaten2 14th Sep 17, 6:09 PM
    • 713 Posts
    • 320 Thanks
    purdyoaten2
    It was empty for a while before being worked on, then gaps between lettings. Also family and friends lived there rent free when they needed to and it was empty.

    Does this make any difference?
    Originally posted by POPPYOSCAR
    Worked on? Were these capital improvements which would be added to your property costs for CGT purposes?

    Brightly - you are very observant. However surely any calculation on a reduced period would still be way in excess of the maximum if £40000? Approx £170000.
    Last edited by purdyoaten2; 14-09-2017 at 6:15 PM.
    purdyoaten lost his password
    • POPPYOSCAR
    • By POPPYOSCAR 14th Sep 17, 6:22 PM
    • 10,829 Posts
    • 22,557 Thanks
    POPPYOSCAR
    Worked on? Were these capital improvements which would be added to your property costs for CGT purposes?

    Brightly - you are very observant. However surely any calculation on a reduced period would still be way in excess of the maximum if £40000? Approx £170000.
    Originally posted by purdyoaten2

    Completely redecorated, new bathroom, kitchen, old falling down conservatory taken down.Patio laid. New boiler, shower fitted etc.

    But this was 30 years ago no receipts or proof would be available.

    How does the property not being rented out for the other 6 years affect the calculation of 15 years rental when it was?
    • purdyoaten2
    • By purdyoaten2 14th Sep 17, 7:06 PM
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    • 320 Thanks
    purdyoaten2
    Completely redecorated, new bathroom, kitchen, old falling down conservatory taken down.Patio laid. New boiler, shower fitted etc.

    But this was 30 years ago no receipts or proof would be available.

    How does the property not being rented out for the other 6 years affect the calculation of 15 years rental when it was?
    Originally posted by POPPYOSCAR
    My point was that, even if it was let for only 9 years rather than 15, the letting relief calculation would become 108/360 x £530000 which is still considerably above the £40000 max.
    purdyoaten lost his password
    • POPPYOSCAR
    • By POPPYOSCAR 14th Sep 17, 7:17 PM
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    POPPYOSCAR
    My point was that, even if it was let for only 9 years rather than 15, the letting relief calculation would become 108/360 x £530000 which is still considerably above the £40000 max.
    Originally posted by purdyoaten2
    So the fact that it was owned for 30 years lived in for 9 rented for 15 leaving 6 years bears no relevance to the calculations?
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