Another CGT Question?

Kinnairdy

Good Morning everyone,
An approximation of CGT to be paid on following would be much appreciated.
Bought terrace of x 3 houses 4 years ago, (wanted 1 for our daughter but owner would'nt split), anyway rented out the other 2, have now decided to sell and trying to work out rough idea of how much CGT will be chargable on sale.
Bought for £37,500 - No Mortgage
Now worth IRO £12500,00 (all 3) £12500,00 offered last night
Allowable deductions + CGT allowance will be around £65,000
Profit for CGT purposes £60,000 (am I right?)
Taper relief @ 10%?
Husband on disability, (not a taxable income)
Apart from rent from properties my income is around £500.00 per year from P/T job.
Properties in process of being transferred jointly to take advantage of both CGT allowances.
Daughter has lived in each one at some point over past 4 years but do not think this would be classed as 'family' home so no joy there I assume.
Thanks

Chrismaths

You shouldn't be bundling up CGT exemption and allowable deductions.
Is this one CGT exemption or two - it can't be calculated without these being separated.

If you want to DIY, then taxable gain = Proceeds (£125000) - allowable expenses (unknown)

At this point you multiply by the taper (so 10% relief => 90% of gain chargeable).

If it is a jointly held house then this gain is split between you. You then deduct the annual exemption from each of your gains (£8,800 each).

Assuming your husband has no taxable income, then the first £5035 is tax free, and the following £33300 is taxed at 20%. For you it is treated similarly, but you already have some income which will be taxed first.

silvercar

sale cost=125k, purchase cost=37.5, fees (inc EA) = say 3.5k?

profit= 125-41=84k

tapering relief on 4 years ownership is 10%.

chargable gain=84 x 90%= 75.6k.

Rent is part of your income, so I'm guessing your a basic rate tax payer so gain is charged at 20%.

CGT allowance of 8.8k for 2006-07. so 75.6-8.8=66.8. 66.8 x 20% =13.36k.

If you transfer into joint names remember that one of you won't be entitled to taper relief as they've only owned the property for a short time not the 4 years.

The best thing would be to sell them in separate tax years, then you will have a CGT allowance of 8.8k in each tax year.