CGT advice would be appreciated

ShowUsTheMoney

Your advice would be appreciated on whether my wife and I would be liable to pay CGT on the sale of our 2nd property. Details as below:

Purchased as main residence 13/7/2001 £124,950
Main Residence 13/07/2001 – 18/10/2002
Let Property Out 25/10/2002 - 30/03/2007
Property Sold for £210,000 and due to complete 15/6/2007.

Also do we provide this information as part of the normal self assessment process and is it advisable to find an accountant due to the complexity involved. Any advice would be very much welcomed. Many thanks

David170607

I would suggest you get advice from a QUALIFIED accountant or QUALIFIED tax adviser on this.

One piece of information which you don't give in your question is the date on which you exchanged contracts on the sale of the property. In England and Wales (I am not sure about Scotland) if this was before 6 April 2007 any CGT due will be payable on 31 January 2008. If it was after 5 April 2007 any CGT payable will be due on 31 January 2009.

This also affects which tax return you have to put the sale on.

There MIGHT in fact be no CGT to pay - get proper advice!

silvercar

Gain = 210-125=85k.

costs (estate agent, solicitor etc) assume to be 3k?

gain=85-3=82k

PPR for 1.25 years, add last 3 years of ownership = 4.25 out of 5.7 years

so gain reduced by 82 x 4.25/ 5.7=61.14k to 83-61.14=21.86k

lettings relief (as you have let a home that was your PPR)= 40k max for each of you, so that takes care of the rest of the profit.

For completeness I should say that you would also be entitled to taper relief. As you owned it for 5 whole years, this reduces gain by a further 15%.

You are lucky in that lettings relief is a generous relief and only available where you have lived in a property AND then let it. It provides a maximum of 40,000 each in relief.

Bean_Counter

David170607 wrote: »

I would suggest you get advice from a QUALIFIED accountant or QUALIFIED tax adviser on this.There MIGHT in fact be no CGT to pay - get proper advice!

Normally I would agree, but this is a pretty straightforward case. The only thing you need to reassure yourself on is this is an anonymous forum, with no come back if you take advice which turns out to be incorrect. Hence you need to make sure you are happy with the preceived quality of the information on offer.

Silvercar's calculation looks fine (as usual), and since there is no CGT to pay, I do not see the need to incur additional professional fees.

If you wish, have a read of the following HMRC helpsheet, which is pretty clear. Also the last paragraph shows how to treat the relief on your tax return:

http://www.hmrc.gov.uk/pdfs/1999_00/helpsheets/ir283.pdf