CGT on RTB 2nd property & transfer of equity query...

aetr

Hi,

I am filling in my return and have CGT to pay for a property I purchased in my maiden name in 2001. The transfer of equity took place in 2009 into my married name with my husband (to permit RTB mortgage). Prop was then let. 2 q's - when filling in the value/cost ofacquisition do I put what I paid or the market value before the discount under the RTB SCHEME. 2nd q - what do put down on acquisition cost for my husband ? As the transfer of equity took place in 2009 . Market value then or original price I paid for it! Advice please, would be most grateful.....I only lived in it a few months more after purchasing and don't have anything to confirm this? Not sure what I would need?

CLAPTON

the acquisition cost is 2001 for both you and your husband


assuming you lived in the property from 2001 to 2009 you have PPR and letting relief plus your cgt allowance on your half


critical factor is did your husband live in the property as owner?

aetr

Many thanks for your reply...do I use the 2001 actual price paid or market value (due to discount under RTB scheme)...

Also I lived there for a few months after 2001 and my husband has never lived there...

Ooh another Q - on the child benefit current year they ask if you have earned over £50k in the year...if I include the profit on property sale split then it would be yes, or is this separate issue dealt with under CGT?


Thanks

holly_hobby

OOh nice try ... its the pch price ... market value is only where the assets were not purchased ie an inheritance/gift and/or as a result of a connected transfer (ie sold at under value to you by a family member, which does not include exercising a RTB option )

You will qualify for PRR, and if sold pre 6 April 2014 also the last 36mths of ownership are exempt from the calcs (18 mths post 6 April 2014), lettings relief (upto a max of 40k), associated acquistion, disposal and professional fees, improvement (not maintenance) costs, any prev reported CGT losses and your annual unused cgt allowance which is £10,900 for 2013/14, .

Hubby won't qualify for your PRR relief under spousal inheritance, as its never been his home, refer to the attched ref notes - http://www.hmrc.gov.uk/manuals/cgmanual/cg64950.htm - he will qualify in applying his annual cgt allowance, associated fees as noted above, and any prev reported losses.

The residual gain is taxed at 18% if the individual is a basic rate tax payer, or 28% if they are a higher rate tax payer - reported via your individual annual SA returns.

Hope this helps

Holly

aetr

Very grateful for your time and replies....

CLAPTON

just for the avoidance of doubt, you will both have to fill in your own forms as you will each pay cgt on your respective halves

aetr

Many thanks,

I have split everything 50/50 thank you Clapton.
Two more issues. I cant find where I claim for the Annual Exempt Amount (does this apply automatically at the end?)
Also PRR where do i claim this and how do i work it out..I was there for 1 month after purchase April 01 - sold Dec 12?
Again Letting relief - i only let it from 2010 on BTL so not sure about this either and whether i can claim

Purchase 40,000-sold 145,000 = 105k /2 = £52500gain each approx before the above applies?

holly_hobby

Your individual share of gain is £52500

You owned the property between apr 2001 and dec 2012 = 140 mths

PRR - you lived there for 1 mth, and as such can also claim the last 36 mths exemption under current PRR regs - this means that you have 37 mths PRR exemption at a value of £13875.

£52500 less your PRR exemption leaves a gain of £38,625

Against this you can apply your lettings relief - which is the lower of 40k, PRR relief, or the gain, so you can apply £13875.

This leaves £24750

You then take off capital expenditure such as acquisition, disposal professional fees, prev reported cgt losses, improvement costs.

You then apply your availalbe annual cgt exemption , which is £10.900 2013/14.

The residual is taxed at 18% if you're a basic rate taxpayer/ 28% if a higher rate tax payer.

Your partner, can only apply the £10900 plus his share of costs against his share, as he has never lived there .

Hope this helps

Holly

getmore4less

RTB with only 1 month resident was that allowed under RTB?

holly_hobby

Depends upon the council, but generally there is no restriction that they have to reside there for any set period after exercising a RTB (having already qualified for RTB option itself) - sale within 5 yrs of RTB triggers a discount clawback exercise

Hope this helps

Holly

aetr

Holly thanks very much - where do i apply this? i'm using their easy computation sheet? is it where it states deductions under reliefs and elections? do i add the two figures together and enter as one figure?
Holly the allowance is 10600 for 12/13?

to Getmore4less-i lived in the property from 95 but could only purchase from 2000