Capital Gains tax

ceeforcat

goalhanger wrote: »

Interesting thread as I am thinking of selling a 2nd home. We have owned the property for about 12 years and have been collecting a peppercorn rent from my parents.
If I now sell the house which was worth about £150000 in 2000 and now worth about £330000 will I be able to offset my CGT allowance for the whole 12 years ?
Seems like everywhere you turn the Tax man takes his cut. Just had to repay ALL the tax credits we ever received in one go !:(

Thanks.

One CGT allowance against the gain I am afraid, two if, as it appears, it is in joint names. That is £21200 of allowances in total.

On a separate point, how did you acquire the property? Was it gifted from your parents?

somethingcorporate

Still, look on the bright side. You've gained £180k in 12 years from doing nothing but holding on to the property even if the tax man does get his hands on some of it.

goalhanger

Oh dear, I thought I could use all the previous years allowance. I won't sell it then......I'm not giving all that to the tax man . As it was an inheritance they already got there hands on some of it already.
Doesn't anyone know of a way to reduce the CGT ????

ceeforcat

goalhanger wrote: »

Oh dear, I thought I could use all the previous years allowance. I won't sell it then......I'm not giving all that to the tax man . As it was an inheritance they already got there hands on some of it already.
Doesn't anyone know of a way to reduce the CGT ????

Forgive me if I appear confused - you state that it is an inheritance but yet you are receiving a peppercorn rent from your parents?

goalhanger

Yes an inheritance and we didn't want to sell it so we asked my parents if they wanted to live there for minimal rent. Been 12 years now......

ceeforcat

goalhanger wrote: »

Yes an inheritance and we didn't want to sell it so we asked my parents if they wanted to live there for minimal rent. Been 12 years now......

So I am correct in thinking that the inheritance was from someone other than your parents i.e. they did not gift the property to you - I understand now.

goalhanger

That's correct. Getting on a bit myself now so thought about buying somewhere in West Country to get away from it all. But maybe not.....
This house is also going to make up my pension as I'm self employed.

ceeforcat

Well the absolute worse case scenarion is that the CGT bill will be £44800 - £180000 less £20000 exemption @28%. I do not know your rates of tax and 28% is the maximum rate one can pay. Remember that any costs of improvements since 2000 will also reduce the profit and, ultimately, the gain.

mulronie

goalhanger wrote: »

We have owned the property for about 12 years and have been collecting a peppercorn rent from my parents.

goalhanger wrote: »

we asked my parents if they wanted to live there for minimal rent.

By the way, a minimal rent is not a peppercorn rent

Peppercorn means nothing (well it literally means one actual peppercorn like used in grinders) - it's put into contracts, typically in reference to groundrents on leaseholds, because a contract under common law needs a consideration. That is, it needs something to change hands. A peppercorn is used as the 'legal fiction' to charge nothing whilst still technically having a consideration in the contract.

martinsurrey

mulronie wrote: »

A peppercorn is used as the 'legal fiction' to charge nothing whilst still technically having a consideration in the contract.

wrong, I collect all my peppercorns, and once a year I hold a peppercorn party for me and all my landowner friends, we eat them, roll round in them, and throw them around while shouting "AFFLUANCE" at each other!