Capital Gains

andy5241

Sorry if you've gone over this before. I purchased a house in August 2000 which cost £52,000 and lived in it until 2007 and then let it out.

I then bought a new house with my partner, I am in the process of getting my house back and plan to sell it sometime in the new year. I owe £80,000 on a interest only mortgage on that property.

My question is if the house is now worth around £120,000 what sort of Capital Gains will I have to pay?

Thanks for any and all advice given.

Andy.:j

CLAPTON

basically none as you have several reliefs

principal private residence
last 36 months
letting relief

plus an (unused) 10,600 cgt relief

a more complete explanation will be provided tomorrow

CLAPTON

the way cgt works is as follows

-the tax is based on the gain less certain allowance

- the gain is the difference in buying and sllling price less cost

so here 120,000 - 52,000 - 3000 (say) = 65,000

-this gain is assumed to occur evenly over the period of ownership

so you bought in august 2000

you let it in say august 2007

you sell in august 2013

period of ownership is therefore 13 years or 156 months

-you are exempt for the time you lived there (PPR) and the last 36 months
i.e. 84+36 months = 120

so you are exempt 120/156 x 65,000 = 50,000
-you further have letting relief for the period let or max of 40,000
-so that gives 6 years (72 months) less the overlap with the last 36 months so 36
-so that gives exemption of 36/156 x 65,000 = 15,000

so that means no tax and you haven't even used your cgt allowance of 10,6000

andy5241

Thanks very much for the advice, I was expecting to pay some tax, but now with your comprehesive explaintion I'm less worried about putting it on the market in the new year and coming away with a few pounds.

Andy:beer: