Capital Gains Tax advice

skye78

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[Deleted User]

Hi,

I'm no expert in CGT, but,,,,,,

wouldn't think there should be a CGT issue, as it is he's only made £20k over 7 years, less any fees.

Even if there is, he is allowed £10900 gain, then taxed on £9100 @ 18%, so £1638 liability, ok, a cut on his gain.

I would just sell, not worry.

madgagoo

PPR exemption until he moved out of the property and the last 3 years will be exempt as well (as it was his PPR at some point).

This means 0.5/7 years is chargeable i.e. 1/14 of the gain. This will be under the annual exemption and therefore not chargeable. However the transaction is reportable to HMRC as the proceeds will be more than 4x the annual exemption (however this only applies if he is in SA already).

HTH

jimmo

skye78 wrote: »

Find none of the tax websites give enough info on this kind of situation.

Try this.

http://www.hmrc.gov.uk/helpsheets/hs283.pdf


I’m not sure how important this may be to you but if your husband and his ex were married and he bought her out in the year of separation then his acquisition cost of the property will be the original cost. i.e. as though he had originally purchased it in his name only.

In any other circumstances his acquisition cost will be his half of the original purchase cost plus the open market value of a half share interest at the date he bought her share

The £20k he paid her won‘t actually come into it.

http://www.hmrc.gov.uk/manuals/cgmanual/CG22500.htm


In terms of whether he has to pay CGT or not I don’t think this is very important because, as already discussed, he qualifies for 6 ½ years PRR out of 7 years ownership but it may become important if HMRC come sniffing.

Also you are quite correct. If he doesn’t already complete SA Returns and he has no CGT to pay he will not need to make a Return.

However it is almost certain that HMRC will get to know about the sale and will be more than curious about someone selling a property he hasn’t lived in for more than 3 years and has not declared any letting income or Capital Gains.

Your husband therefore needs to keep his records for the original purchase, buying out his ex and the sale just in case.