Capital Gains Tax

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leftatthelights wrote: »

Ok, so the budget today hasnt had any effect on my original CGT question!:D

Can I ask some specifics now.

The wife and MIL buy the house for 73k in a joint mortgage.
Its is the MIL's 2nd house but the wife's 1st house.
Say in 10 years we sell for 100k and assuming the CGT law stays the same (doubtful I know), this is how I see the CGT being calculated:

27k profit to be split between MIL and wife, this leaves 13.5k profit each. Because it is the wife's first house, she pays zero CGT on her half of the profit whereas the MIL will pay CGT on her half minus the 10.1k allowance which leaves her with a taxable amount of 3.4k which leaves the MIL with a CGT bill of £612.

Can anybody please confirm my calculations???

I think im there or thereabouts?

Thanks.:D

Sounds about right and I'm guessing you could remove selling costs from the profit too.

leftatthelights

Yeah I thought around 2 grand for sellers fee's.

Chances are there will be hardly any CGT to pay for the MIL then??

Im glad I got it right anyway but couldnt have done it without you guys!:T

dimbo61

Your MIL is putting ALL her pension pot into a mortgage for her daughter and son in law to live in which is very kind of her!
Now if she helped with the 20/25% deposit and you got an offset 5 year fix 4.79% with YBS ( only lender that does Family& friends) she could put the rest of HER savings into offset account which she could dip into when she needed money for new car/nice holidays , while you save interest on the mortgage.

leftatthelights

Hi dimbo,

The MIL just came round one night and made us this offer of cashing in her pension towards a deposit for a house!
We were totally shocked by this but she was adamant that we accepted the offer which we ultimately did.
There is a backstory to this, me and the missus have had a mortgage before but it was during the times where mortgages were being offered to ANYBODY!!
Northern Rock gave us a mortgage at 6 times our combined earnings!!!!
We ultimately lost (sold) the house due to not being able to keep up the payments and bills etc and have been gutted ever since because it was our dream home!!

I think she has seen how upset we both were when that happened and wanted to get us back on the property ladder again!! Bless her!

We are going to put money into a high (if you can call it high) interest savings account each month then every year make a lump sum payment towards the mortgage (we are allowed to pay a max of 10% of the existing amount owed per rolling 12 month period).
This will be much more beneficial than just simply overpaying on the mortgage.

When we sell the house (when the price is right) the MIL gets her deposit back plus a few grand as a thank-you so everybody is happy!