Capital Gains Tax - complicated

ADSrox0r

My father wants to sell us the property we live in right now for 100,000. He moved out of the property in 2000 but we (my father included so it was his primary residence) lived there since 1980. The house was valued 2 weeks ago at 150,000. It was bought in 1980 for (I think) about 18,000. He currently lives in another property he owns in Scotland.

He isn't currently working afaik.

Can anyone shine any light on how much the CGT that is due will be?

He says he's talked to his partner who is a mortgage adviser for a bank and she talked to the company accountant and came back with somewhere 'between 16k-21k'.....

danrees

For a completely accurate CGT calculation, you will need to know what the market value was at March 1982.

You should be aware that for CGT the selling price will be taken to be market value rather than the £100,000 you quote.

The last 36 months will always be included as deemed occupation in your father's principal private residence relief, even if he has not lived there. By my counting this gives 3 out of 26 years when not occupied for CGT purposes.

He will get full indexation allowance from 1982 to 1998, and full Taper Relief since 1998 (including a bonus year) reducing the gain to 65%.

I make the calculation as follows:
MV 150,000
Less: Cost (18,000)
Less: Indexation allowance (18,846)
= Indexed gain 113,154

Less: PPR relief (100,098)
= Gain after PPR 13,056
Therefore Tapered gain (65%) 8,487


This would be covered by your father's annual exemption of £8800 and so no CGT would be payable.

I recommend that you actually see an accountant to discuss this. There are also IHT implications if your father effectively 'gifts' you £50,000 of the property.

I don't recommend you see the one that expects to pay CGT of £16k though!!!

dunstonh

I don't recommend you see the one that expects to pay CGT of £16k though!!!

Although that answer was from a bank so what do expect