CAPITAL GAINS on single property divided

maryrose_2

I live in a house that is in x3 flats. I bought the ground floor consisting of x2 flats over 18 years ago. The first floor came up for sale about 5 years ago, I then bought this flat - this means i now own the house.

i have lived in all 3 flats and continue to live in one now.

If I were to sell one or two of the flats would I be considered for capital gains tax?

I have lived in flats 1 & 3 for in excess of 5 years for each. I currently live in flat 2 (the first floor most recently purchased) I could if necessary sell one of the flats to my boyfriend for a nominal amount, would this help me with regard to paying less tax.

My boyfriend and I will be getting married nextyear but today, he is not connected to my home in anyway on paper.

Please help any advice would be good
rosE

cash99

Yes you may well have to pay CGT, but there are lots of exemptions for properties that you have lived in.

Assuming the flats are still divided into 3 separate properties. Then this should be the basis of the capital gain computation.

Sale Proceeds - sales costs - purchase price - purchase costs - improvement costs = capital gain.

Multiply the capital gain above by number of years the flat was you Principal Private Residence(PPR) plus 3 years and divide by the number of years the flat was owned.

e.g. owned for 10 years
lived in for 5 years as PPR
Plus 3 years

= 8/10 . This is the amount of the gain that is exempt under the PPR exemption.

Then you can take off the lettings exemption which is the lower of the remaining gain, the PPR exemption or £40k.

If there is anything left you can apply taper relief, and if owned before April 1988 indexation etc.

Selling a falt cheap to your boyfriend is a bad move as you will lose the exemptions above, as he will not be entitled to them, leaving more of the gain taxable, when he eventually sells.

If you are talking about large sums, a chat with a tax accountant would be money well spent.

maryrose_2

this information is really valuable I am just sorry it has taken me this long to find the thread and your reply.

thanks once again - i will do as you say - invaluable....
Rose