CGT Tax on House/Home Question Plz help

rfowler

Hi Guys,

Need some advice for my friend... Here goes:

My friend has 2 houses, one he lives in with a mortgage (House A) and one without a mortgage (House which is on rent.

Say in the few months/years He moves out of House A -which has a mortgage and moves into House B without a mortage and then makes that his Home.

House A will then go on rent which has a mortgage...

1. When he sells House B without mortage after say a few years maybe 5 years will he need to pay CGT?

Sorry if its long winded or even a silly !!!! querstion just wanted to help a mate out thats all.

CLAPTON

mortgages have nothing (much) to do with cgt.

for house B; the cgt calculation depends upon
1. when he first bought it
2. at what price
3. when he moves into it (basically how long he lives there as his home)
4. how much he sells it for
5. cost of any improvements

rfowler

For House B say he moves in tomorrow and stays there for 5 years and when it comes to sell will he need to pay CGT on it?

What do you mean cost of imporvments?

CLAPTON

rfowler wrote: »

For House B say he moves in tomorrow and stays there for 5 years and when it comes to sell will he need to pay CGT on it?

What do you mean cost of imporvments?

maybe, mabe not
if you answer my questions then I can give you an answer

by cost of improvements I mean the cost of any improvment he has made (as opposed to general maintenance) as they can be offset against cgt liability.

rfowler

From what I can gather it was left to him by his late grand father and at the time it was valued at £230k but i think its probably worth about £250k

CLAPTON

ok
since you seem determined not to answer some very simple questions.......


let X be the price on acquisition
let Y be the selling price
let Z be allowable costs (buy/sell cost plus improvements)

Gross gain is GG = Y-X-Z

Let P be the period of ownership in months
let Q be the period let out
let R be the period he now lives it in

he has the following reliefs
PPR is the period of residence plus the last 36 months ...so if R>36 then that means R

so he has PPR relief of GG x R/P
plus he is allowed letting relief that is the lesser of PPR, GG x Q/P or 40,000

and of course he has a cgt allowance of 10,600 (this years value)

probably will pay nothing but depends upon the details

rfowler

Thanks clapton very helpfull

I did try to send you a private msg but it says your inbox is full, can you please delete some things i can send you a private message