Two CGT questions - one urgent for this tax year

D_Dickenson

Any advice appreciated:

1) Property CGT.

I have just moved out of a property that has been my main residence for the past 10 years.

Property bought in 2001 for £210,000
Was main residence for 10 years until 2011 when valuation was £380,000
Property then let out for 5 years until 2016.
Property sold for £400,000 in 2016.

Please can tell me what the CGT due above is?

What I am worried about is that in 5 years time when the property has not been my main residence for over 3 years then I will be due to pay CGT on the entire gain from £210k rather than from £380k when I moved out. If this is the case then it would make sense to sell it soon to avoid this. Alternatively if there is some kind of proportional distribution (in the above example for 5 out of 15 years the property was let so 33% of the gain could be liable for CGT) then again it would still make sense to sell soon.


2) Assets CGT. (Urgent for this tax year)

I have currently sold assets in this tax year making a £10,049 gain which is fractionally below the £10,100 exemption.
Does this need to be reported on my tax return?

I could sell further assets on the 5th April to make the total gain fractionally above the exemption. Is there any advantage or disadvantage to this? One advantage I could see is it crystallises the gain in the eyes of the tax man and shows where funds have come from. One disadvantage I could imagine is that it uses up the CGT allowance for this year which could be rolled over for a future year? I don't know if either of those are true I'm just trying to understand how CGT works.

Any advice on the above appreciated. I apologise for the urgency of this advice due to the lack of time I have to sell further assets as it is now the 5th April!

CLAPTON

question 1

it work like this

gain = 400,00 - 210,000 = 190,000

(actually you can also deduct buying and selling cost and any improvements (not maintenance)

period of ownership = 15 years (this should really be worked out in months but you can do that yourself)

period of principal private relief = 10 years plus last 3 years = 13

so exempt is 13/15 x 190,000 = 164,667
so taxable gain is 25,333

but you get letting relief max of £40,000

so there is no cgt to pay (and you haven't even used your yearly cgt allowance of 10,100)




question 2 ..it's a bit late so maybe I ought think abouit this a bit more but
whether you need to report depends upon the total VALUE of the sales (if greater than 40k) even if the gain is below 10,100

if you have made a gain of 10,049 this year, then you only have £51 to carry over anyway so it won't make much difference whether you sell anything else

D_Dickenson

Thank you. That is extremely clear and useful.

Pennywise

CLAPTON wrote: »

if you have made a gain of 10,049 this year, then you only have £51 to carry over anyway so it won't make much difference whether you sell anything else

You can't carry forward unused cgt annual exemption - it's use it or lose it!