Capital Gains Tax on 2nd property

Jaybee5

Hi folks,

I've tried deciphering some government websites to work out what the CGT hit will be on a property i've just agreed a sale on, but am apparently a bit dim as I can't get to the bottom of it.

I will get an accountant/solicitor to complete the necessary forms once the sale goes through, but If there are any experts out there that can give me a rough estimate I would be very grateful!

The details are:
Property bought for £36k in 1992 and about to sell for £95k. As there is no mortgage (paid off approx 6 years ago) this equates to £59k profit. This is a second property and I intend to use the proceeds to rennovate the property I live in so it would be good to know what my budget is.

Not sure if this matters or not, but I am married (does this provide additional tax benefits as we jointly own the asset?) and we're both 40% tax payers.

Many thanks.

fengirl_2

Have you ever lived in the property?

Jaybee5

Yes - for the first 4 years, then we've let it on and off over the last 12 years. Tenants have ranged from friends on an informal basis and then more recently (past 3 years) we've used a letting agent. We've been stitched up by a few tenants who've not paid us for 4 months or so and wrecked the property so I doubt we've made much additional income. I should be able to get exact income details from looking at bank statements but it will difficult to quantify our outgoings over the entire period.

fengirl_2

Ok, thats enough information.
The gain, as you say is £59k.
The 4 years you lived in it are exempt from CGT as are the final 3 years, giving and exemption of 7/17th, or about £24295 (but you work out the exempt period by counting exact months).
This makes £59,000 = 24,295 = £24236 chargeable. This is covered by the let property relief, so no CGT is due.

Jaybee5

Thanks Fengirl and Jimmo - that's really helpful and good news too!

fengirl_2

Fengirl's arithmetic is a bit dodgy as usual. Thanks jimmo.

fengirl_2

Reminds me of my time at the coalface when I was called to see a very emotional Spanish lady who was in the same position as the OP. She was very upset thinking she had to pay CGT on her house, but I did the maths and worked out that she wouldnt have to. She was in tears of gratitude when I said no CGT, so I thought I should get a colleague to check my maths which he did and it was fine, so she went away happy.
A week later, I got a call to go to the 'counter' where this lady wanted to see me. I thought, 'oh no, someone has issued a CGT assessment on her'. I took her into a room - but all she wanted was to give me a box of chocs and 2 (very nice, John Lewis) pyjama cases for my, then, small twins!
I wonder if such a reward system could be instituted on here?