avoiding capital gains tax on 2nd house

budgetflyer

I thought CGT was 40% so this would be a bit more than £10K

Alpam

I have been watching this discussion grow and my only additional comment is that what is clear is that to save tax you must forward plan. Somewhere along the line you have decided to sell the property, I am not saying it was the spur of the moment thing, but it does not seem that you thought what you wanted as an end result when you went into the project.
There are plenty of legitimate ways of reducing your tax liability, some of which have been mentioned above, if you have time and the inclination you could pay no tax simply by making a genuine move to the 2nd property, but this may be to big a sacrifice for you, so some of the smaller steps need ot be taken to minimise the tax bill. Good luck

System

I've been reading the replies to the question and would like to add a question of my own. Myself and my husband are seriously thinking of buying a property to rent out in partnership with 2 other people ie. the property will be owned jointly by 4 people. Are we all entitled to our annual allowance of £8200 before Capital Gains Tax?
So... would the property have to make over £32800 profit before any of us were liable to CGT?

System

First time posting

Can I ask what may be a few daft questions

Selling second house which was transferred to joint names 4 years ago (at no cost to us)


1) Will ALL the monies recieved be liable to CGT?

2) If CGT is calculated on the value in 2004 minus value in 2000 less allowances. How does one determine / prove to tax man the value of the property 4 years ago?

Thank you for your time

Alpam

Andrea - yes is the short answer. The exemption applies to each individual. Also once you have owned it for over 3 years taper relief begins to kick in.

System

I am selling a second property that i was gifted by my father 18Months ago as per one of the crecent threads how do i prove to the taxman what the house was worth at the time of the gift, if i choose to sell in the future to obtain my CGT figure. Both myself and my wife are joint owner of the property. and also in relation to the original thread 10K is to low for this calcualation as you add your Taxable income minus relief to your gains and anything over 22900 is taxed at 40% not 20% i do believe, please correct me if i am wrong.

Thanks

Johnny 5

johnllew

The proof is the value your father declared for Capital Gains Tax when he gave you the property! That is your starting point ie your acquisition value.

Not necessarily. The value for CGT purposes where parties are connected is usually the market value. His father may well have transferred the property under MV and declared that lower value.

System

My question is about Capital Gains Tax too.
I lived with my husband in a bungalow for about 6 years and then he became sick and my daughter and her children moved in with us to help me look after him.
He died about 18 months ago and my daughter wanted to move back to the area where she lived before and wanted me to go with her, so I put my bungalow on the market, but it didn;t sell in time for us to get back to her area for the new school year so I borrowed £85,000 against my bungalow (valuation at that time £140,000) and put it down as a deposit on a house purchased with my daughter which we own jointly. My bungalow I let out at £550 per month through an agent, intending to sell it after two years as I had a two year interest only fixed rate mortgage.

My question is, what happens about CG Tax when I sell it as I was hoping to invest the excess money in some sort of regular pension income?

jackie ???

lisyloo

Because this is not your main residence then you will have to pay CGT on any gains you make (note that this applies to your own share of the house - you daughter will also have to pay CGT on her share).
You have an annual allowance of £8200 which is CGT free.
Any gains after that on your share will be taxed.

Alpam

Jackie
The CGT position on your original bungalow, lived in with your husband, is that it will not attract CGT provided it was your main residence, which you say it was, and it is sold within 3 years of the date from which you moved out and acquired a 2nd main residence ie the half share you own with your daughter. Even then the proportion that becomes taxable would be small and with the annual exemption of £8200 and taper relief it would take quite a while before you came into the taxable bracket.
The property you own with your daughter will also qualify for main residence exemption on your half share as long as you live there. You are allowed this overlap period to give you time to settle your affairs and/or to find a buyer for your property