Capital Gains Tax

chris.cdm

Hi my wife and I are getting divorced and to finance the split we are selling our former marital home of 5 years ago which has been rented since then. The value of the property is the same as when we lived there. Will there be any tax to pay on the proceeds ?

Thanks

Chris

CLAPTON

chris.cdm wrote: »

Hi my wife and I are getting divorced and to finance the split we are selling our former marital home of 5 years ago which has been rented since then. The value of the property is the same as when we lived there. Will there be any tax to pay on the proceeds ?

Thanks

Chris

the cgt is based on the increase in price between the purchase price and the selling price less certain allowances and costs

if you would like to give the the following detail

is the property jointly owned
date of purchase
price of purchase

date you moved out

date you starting letting
date you stopped letting

current likely price

presumably you declare the rent for tax purposes?

chris.cdm

Hi

Purchased in 1996 fot £ 64000
Jointly owned
We moved out in 2008 it was up for sale at £ 285,000 at the time
The sale fell through and we rented it out shortly after
The property was rented until September this year and have now agreed a sale of £ 280,000
All rented income declared

Many Thanks

CLAPTON

chris.cdm wrote: »

Hi

Purchased in 1996 fot £ 64000
Jointly owned
We moved out in 2008 it was up for sale at £ 285,000 at the time
The sale fell through and we rented it out shortly after
The property was rented until September this year and have now agreed a sale of £ 280,000
All rented income declared

Many Thanks

I'll give a more detailed reply tomorrow as I'm about to go out but although you have a large capital gain, the good news is that your reliefs (primary residence and letting relief) means you will have no tax to pay.

CLAPTON

chris.cdm wrote: »

Hi

Purchased in 1996 fot £ 64000
Jointly owned
We moved out in 2008 it was up for sale at £ 285,000 at the time
The sale fell through and we rented it out shortly after
The property was rented until September this year and have now agreed a sale of £ 280,000
All rented income declared

Many Thanks

the tax needs to be worked out using monthly figures but I'm using yearly ones as it easier and the result would be the same


gross gain is 285,000 - 64,000 = 121,000 : you can deduct buy/selling costs and any capital type spending on the property too


period of ownership is 2003- 1996 = 17 years (as I say this should really be in months)

exemption

because you lived their as your primary home your get two exemption

period of residence (PRR) plus last 3 years so 12+3 = 15 years

so 221,000 x 15/17 is exempt i.e. 195,000 (leaving only 26,000)

plus letting relief which is the lesser of

-period of let
-or period of PRR
-or £40,000 per person


so clearly nothing to pay
(in addition you each have cgt allowance of 10,900 that you don't need to use)

shows how much actually living in a property is worth cgt wise

chris.cdm

Thanks very much very informative and good news for me