Capital gains tax - will I need to pay it?

stueyscott

will I need to pay capital gains tax?

We moved house in 2008 but we were unable to sell our old house.

We have owned the property since 2000 and lived in it up until 2008. We have a tenant in it at the moment but the mortgage deal runs out next Sept so we are possibly looking at selling it.

My question is will I need to pay capital gains tax?

Is there anything I can legally do to aviod / reduce the amount if I do have to pay it?

brit1234

If you have another property as a home yes. Unless each partner owns each property solely you will have to pay 28%.

pararct

HMRC Rules

Do you also own the place you are currently living in?

Check out the
What is Private Residence Relief

section on the above link.

Consult an accountant for the latest rules. Not sure but if you are unsure whether you have to pay it or not and you do, you will probably need an accountant to work out what you do pay!

Does that make sense?:rotfl:

CLAPTON

your first property is exempt from cgt for the period you lived in it plus the last three years ..so currently the answer is NO tax to pay.

also even if you go over the three exempt period you also have letting relief and you have 10,100 cgt allowance ..so you are pretty safe for the next few years unless your house is high priced

if you want to say the purchase price and the likely price now we can check it out for you.

stueyscott

Clapton - Just posted details on a similar thread you had responded to.

We bought the old house for 75k , its now worth about 160k, we lived in it until Sept 2008 so if we dont sell it until after sept 2011 how much do you think we will pay?

Cheers

00ec25

this question crops up reguarly, I am surprised the first 2 posters have not learned the answer yet

a) it was once your main residence, it is therefore exempt for the period you lived in it as the main residence,

b) given the fact of a) above, you then have 36 months from the date you move out to sell your old house - aka the "3 year rule". If you sell within 36 months you are 100% exempt from CGT for the enitire period you owned it,

BUT

c) if it takes longer than 36 months to sell means you will be liable for CGT but will not necessarily actually have to pay any CGT as this depends entirely on the value of the gain you have made because fact a), coupled with the fact it has subsequently been let out, means you can claim letting relief which will reduce any gain by up to £40,000 per owner (ie £80,000 if it is in joint ownership)

d) you can deduct the costs (eg EA fees and legal fees) of buying and selling the property when calculating the gain

e) each owner has the normal annual personal exemption allowance of 10,100 in the year of sale

Post up the following details and one of the regular posters may (once again) do the maths for you (CGT calculations must be done in months not years):
- month you bought it ,
- the month you expect to sell it
- the (estimated?) selling price
- original purchase price
- month you moved out in 2008
- month from which it was let
- is it joint ownership

here is an example i prepared earlier

stueyscott

00ec - Cheers for that.

Looked at the example - makes relative sense - looks like we will be fine even if we sell after the 3 year period as long as house prices don't rocket ;-)
Hopefully it will be within 3 years anyway.

Cheers

jockosjungle

You'll only pay on the gain that relates to the part where it wasn't your home plus the 36 months, so if you sell it a year after that runs out you'll pay a proportion of 1 year / the years you've owned it

R