Capital Gains on Second Property

uclown2002

Bought with wife in joint names in 1998 for £115K

Lived there with wife until 2006, when we tried to sell for 330K but were unsuccessful.

We then let the property out and bought another home.

We are in process of selling the property now for about 300K.

Are we liable to CGT on the profit even though it has gone down in value since we let it?

Let me know if you need more information.

CLAPTON

assuming that when you bought it you were married then it works this way


gain is = selling price - purchase price - buy/sell cost - 'improvements (not maintenance)

so lets say the gain is 300,000 - 115,000 -5000 (cost says)

so that equals 180,000


so as it is jointly owned each person has a gain of 90,000
now the following needs to be worked out in months but I will stick to years for simplicity.

period of ownership is 15 years
period you actually lived their as private principal residence (PPR) was 8 years


now the gain is assumed equal over the period but you have exemptions

firstly PPR plus last 36 months so exempt for 11 years

so 90,000 x 11/15 is exempt i.e. 66,000 each person

secondly you get letting relief which is the lesser of PPR , the period let or 40,000

so period let (less last three years ) is 4 years
so 90,000 x 4/15 = 24,000

so total exemptions each are
66,000 + 24,000 = 90,000

so no tax to pay and you also have an unused 10,900 cgt allowance

nomunnofun

Excellent as always clapton. The op and his wife must remember to declare the sale by filling in SA forms for 2013/14 even though no CGT due.

uclown2002

Great; thanks for that!

uclown2002

nomunnofun wrote: »

Excellent as always clapton. The op and his wife must remember to declare the sale by filling in SA forms for 2013/14 even though no CGT due.

How is this declared on the SA form? I've looked at a SA form and don't see an appropriate section for this to go in. And what information is required?

Thanks.

nomunnofun

uclown2002 wrote: »

How is this declared on the SA form? I've looked at a SA form and don't see an appropriate section for this to go in. And what information is required?

Thanks.

If completing online - answer the 'Do you have any Capital Gains' question - 'Yes' in the 'tailor your tax return' section.

If completing using a paper return you need to complete the additional Capital Gains pages - the pages and notes are as below:

http://www.hmrc.gov.uk/forms/sa108.pdf

http://www.hmrc.gov.uk/worksheets/sa108-notes.pdf

uclown2002

nomunnofun wrote: »

If completing online - answer the 'Do you have any Capital Gains' question - 'Yes' in the 'tailor your tax return' section.

If completing using a paper return you need to complete the additional Capital Gains pages - the pages and notes are as below:

Thanks I'll take a look at that.

uclown2002

As a matter of interest what qualifies as an improvement to the property?

Before we let the house we had block paving done, 2 new bathrooms, a garage conversion and spent thousands on the garden. No receipts though given the passage of time.