Capital gains tax - Do I have to pay? & ways to not pay!

Grumpy&Sleepy

I bought a flat 3 years ago, its in a block of 4 and my family live in the other 3 flats. I previously lived in the flat above with my parents and have never changed my address with my bank/mobile phone bill etc as it all come through the same letter box anyway.
The bills of my flat are all in the name of my flat mate as he's alot more organised than I am and more likely to get them paid on time!

Now I'm looking to sell but someone has told me I may be charged capital gains tax as there is no way of proving I lived there for 6 months. Also because I own the flat my ex and my son live in my flat will count as a second property.
Can anyone help please?

Melissa177

I recall reading in the Telegraph homes section a couple of weeks back that if you have owned a flat for 3 years or less, and lived in it for some of the time, you are not liable for CGT. Might be best to ask an IFA?


UPDATE:

Found this online:

When you come to sell the property, you will be liable for CGT, but only on the gain you have made

You have a personal CGT allowance of £7,700 a year. If your property is held in joint names with a spouse or partner, you can add your allowances together

Any net taxable gain in the year is added to your total income from other sources in the year to determine the tax band applicable.

If the property was formerly your main residence (ie your home), you are exempt from CGT if you sell within three years of it becoming a rental property

Where a gain is made on disposal of a property that has been a main residence at some point, but has also specifically been let as residential accommodation, then a further special relief is available. This exempts a gain of up to £40,000

If the property was never your main residence, you are liable for full CGT for the first three years. After that the proportion of tax charged is tapered for the next seven years. There is a reduction of 5% after three years increasing by 5% each year to a maximum of 40% of the gain, after 10 years. This equates to effective tax rates for higher tax payers of 24%, and base rate tax payers of 13.8%.

http://www.yourmortgage.co.uk/03_btl/btl3.htm

moneystuff_2

Form what i understand you can claim up to 3 years residence. After that its offset against the number of years you been there and how long tennants have been.
Say you sold property and made 10,000 pounds, and the tennants lived there for 3 years and you lived there for 6 years you could get cgt relief on 5,000 but would be taxed on the remaining 5,000.
Maybe someone else here can expand?

moneystuff_2

That sounds about right!

RabbitMad

see my post in money stuff thread on how to calculate this:

http://forums.moneysavingexpert.com/showthread.html?t=399346

Ian_W

You might also want to read this thread with a retired accountant and taxman giving advice:

http://forums.moneysavingexpert.com/showthread.html?t=397975

sleepymans

Grumpy&Sleepy wrote: »

I bought a flat 3 years ago, its in a block of 4 and my family live in the other 3 flats. I previously lived in the flat above with my parents and have never changed my address with my bank/mobile phone bill etc as it all come through the same letter box anyway.
The bills of my flat are all in the name of my flat mate as he's alot more organised than I am and more likely to get them paid on time!

Now I'm looking to sell but someone has told me I may be charged capital gains tax as there is no way of proving I lived there for 6 months. Also because I own the flat my ex and my son live in my flat will count as a second property.
Can anyone help please?

I have been reading the HMRC leaflets on CGT lately and my understanding of your situation is that if your flat (in the block of 4) has been your principle place of residence, when you sell it there would be no cgt payable. By the way you dont get "charged" cgt, you have to include capital gains on your tax return form (or if you dont have one of those, you must inform HMRC). As I say if its your ppr then cgt is not payable.The fact that you own another flat where your ex and son live is irrelevant - unless you sell that of course.
If however the situation is that you have let it out since you owned it and havent actually lived there then cgt will apply.
In any case the HMRC website leaflets are helpful if somewhat complicated.

Rimo2021

Grumpy&Sleepy wrote: »

Now I'm looking to sell but someone has told me I may be charged capital gains tax as there is no way of proving I lived there for 6 months. Also because I own the flat my ex and my son live in my flat will count as a second property.
Can anyone help please?

I presume you are registered for council tax? In which case you shouldn't have any problem as this proves you lived there.