Capital Gains Tax - Advice needed!!

sugarpufffairy

Hi,

I wonder if anyone can advise on Capital Gains Tax. I have a property that was a gift to me a number of years ago. I have never lived in the house itself and am liabe to pay capital gains tax if i sell. I have heard that if i make the house in question my main residency for a minimum of 12 months i will not have the tax to pay when i come to sell the property. Can anyone shed some truth on this? and please tell me where i may find more solid information on this. Any advice would be greatly appreciated.

Many Thanks In advance.

J

fengirl_2

If you have never lived in the property, CGT will be payable on the difference between the selling price and the value at the time of the gift.
There is no minimum time you have to live in a house in order to make it your main residence - HMRC would be looking for quality of occupation, eg all utilities and phone in your name, being on the Electoral Roll, bank and credit card companies advised this was your address. However, the only exempt period for CGT purposes would be the time you lived in the house. Living in a house for only part of the period of ownsership does not exempt the whole period of ownership from CGT.

silvercar

If you did live in the property as your principal private residence (properly as fengirl outlined) you would be exempt from CGT for the time it was your home and the last 3 years of ownership.

Pennywise

Presumably you have rented it out. If so, and you can live in it to secure principal private residence relief (PPR), you'll also be eligible for lettings relief which can double the amount of PPR subject to an upper limit.

Also, you say you got it as a gift. Did you enter into a holdover relief election with the person who gave it to you. If so, you acquire their base cost which is your "cost" for CGT. If you didn't, then the person giving it to you should have paid CGT on a "deemed" sale at its open market value at that time - of course, if it was their residence, there'd have been no CGT on them. Best to check if you are unsure as their base cost could be a lot lower than market value, and if you did make a holdover election, then your eventual CGT could be a lot higher.

sugarpufffairy

Hi thanks for your replies.

I have never lived in the house and dont intend to and never let the house.

Please explain further.....For exmple if the property is now worth 130,000 and lets say it was worth 75,000 at the time the house was given to me. Would this mean i pay CGT on the full 135,000 or the different between 75,000 and 135,000 (60,000?) Please advise.

Many Thanks,

J

silvercar

The difference, less selling costs. So if you had a gain of 60k and your selling costs (estate agent, HIP, legal costs) were 3k, you wouldbe liable for CGT on 57k.

You also have a CGT allowance of currently 9.6k if not used elsewhere.

Total liability now 57-9.6=47.4k. Include the gain in your tax return for say 2008-09, submit tax return online and pay tax by 31 Jan 2010. CGT rate is 18%. £8,532 :eek:

sugarpufffairy

Thanks silvercar, Is there an official site or anything i can print off / look further into. I did originally think i would have to pay CGT on just the difference but i spoke to someone at an estate agents who said i would have to pay CGT on the whole amount. Where do you get your information from? or are you a proffessional?
Thanks again for your help., it is most appreciated.

silvercar

here is the helpsheet on private residence relief:

http://www.hmrc.gov.uk/helpsheets/hs283.pdf

Here is a general one on CGT:

http://www.hmrc.gov.uk/leaflets/cgtfs1.htm

sugarpufffairy

Thanks for the silvercar