Question on CGT on Property

MonstersMum

Hi, I have a question about Capital Gains Tax on behalf of my Dad. I will provide as much info as I can and hopefully someone can give me some advice.

My Dad bought a home in 1990 for £55,000. He lived in it for about 20 years until approx 2010 when he met someone and moved in with her. He has rented his house out for the last 3 years (profit/loss declared on self assessment each year) and now the tenants are leaving in March 14. The house is now worth approx £160k, although he will need to do some work on the house to achieve that price - new kitchen, decoration, carpets etc. He intends to sell the house but is unsure about what CTG would be due when he sells it.

Any advice would be appreciated.

CLAPTON

MonstersMum wrote: »

Hi, I have a question about Capital Gains Tax on behalf of my Dad. I will provide as much info as I can and hopefully someone can give me some advice.

My Dad bought a home in 1990 for £55,000. He lived in it for about 20 years until approx 2010 when he met someone and moved in with her. He has rented his house out for the last 3 years (profit/loss declared on self assessment each year) and now the tenants are leaving in March 14. The house is now worth approx £160k, although he will need to do some work on the house to achieve that price - new kitchen, decoration, carpets etc. He intends to sell the house but is unsure about what CTG would be due when he sells it.

Any advice would be appreciated.

from the info supplied the short answer is zero


the longer answer is :

the gain on the property is 105,000
from this he can deduct buying/seeling cost and improvements (not repairs which are charged against rental income)


lets take worst case ; no deduction so gain is 105,000

HMRC assume agin is spread evenly over the total period of ownership

this should be worked out in months but I'll use years for ease

total period of ownership = 24 years

1. the period he lived there and the last 18 month (36 if sold before 5th april) is exempt PRR (so 20 + 1.5 years)

so exemption is 105,000 x 21.5 =94,062

2. plus he gets letting relief ... depnds exactly when he let and he can't doubt count the 18 months so lets say 2.5 years

i.e exemption of 105,000 x 2.5/24 = 10,937


so property is totally exempt

in any event he has a cgt allowance of 10,900


no tax due

MonstersMum

Thanks Clapton for such a speedy response and great news too that it looks like there's no CTG to pay. I'll make sure that I've got the exact dates and details to ensure that your explanation is correct for his scenario and he'll be happy!

Thanks again