Will I have to pay Capital Gains Tax?

velvetee

I've owned my property since 1997 and thinking of selling soon.

I lived at the property for 11 years and have been renting it out for the past 6 years. My question is, as it was my main home for over 10 years will I still have to pay Capital Gains Tax when I sell it?

Thank you

happycamel_2

Yes if you sell after 6th April you will pay capital agains tax on 11+6 = 17. 11 + 1.5 (extra PPP Relief) = 12.5. 17 - 12.5 = 4.5. 4.5/17 = 26% of the gain. Gain = selling price - original buying price according to the land registry. CGT allowance is 11k for the next tax year and you're taxed at18% or 28% depending on your income.

ceh209

It's a bit more complicated than that!

The last 3 years (currently, subject to change from April 2014) qualify for relief.

And look up 'Letting Relief', you can get relief for periods when the property was let to tenants.

So potentially no chargeable gain for you to pay CGT on - you need to look into this a bit more.

It'll be calculated on months aswell, rather than years.

00ec25

happycamel wrote: »

Yes if you sell after 6th April you will pay capital agains tax on 11+6 = 17. 11 + 1.5 (extra PPP Relief) = 12.5. 17 - 12.5 = 4.5. 4.5/17 = 26% of the gain. Gain = selling price - original buying price according to the land registry. CGT allowance is 11k for the next tax year and you're taxed at18% or 28% depending on your income.

if contracts are exchanged on/before 5 April 14 then the OP is entitled to:
a) private residence relief of 11 years (expressed in months not years) plus the final 36 months "deemed" PRR
plus
b) letting relief equal to the lowest figure of a) PRR OR b) gain during let period OR c) £40,000 absolute limit
plus
personal allowance of 10,900

if contracts are exchanged after 5 April 2014 then the PPR deemed relief is reduced to 18 months, but the personal allowance increases to 11,000

OP is certainly liable for CGT but without figures it is impossible to say if any CGT is payable or not, although if any is due it will probably be much smaller than OP thinks

Tykva

Hiya,

my husband and his brother inherited (half each) a flat from their Mum 3 years ago. We live here now and its our the only property, Brother has a place of his own. We are planning to sell the place, its worth about 150K. Will we need to pay capital gains tax or any other fees (we plan to reinvest into other property, brother to put into savings account)? Thank you.

00ec25

Tykva wrote: »

Hiya,

my husband and his brother inherited (half each) a flat from their Mum 3 years ago. We live here now and its our the only property, Brother has a place of his own. We are planning to sell the place, its worth about 150K. Will we need to pay capital gains tax or any other fees (we plan to reinvest into other property, brother to put into savings account)? Thank you.

as it has been your main home then no your husband will not have any CGT liability, assuming you moved into it immediately after her death. If you diod not then will you have exchanged contracts before 6/4/14? If yes then you will get the full 36 months of deemed ownership which may cover your entire period of ownership anyway since you say 3 years ago. If you exchange on/after 6/4/14 then it does matter what date you moved into the property as to whether the entire ownership period is exempt. Even so I very seriously doubt that any CGT would be payable because the taxable gain would almost certainly be covered by the personal allowance

your brother in law will however have a CGT liability and if his gain is more than his personal allowance then he will have to pay CGT. His taxable gain will be the difference between what you sell the property for and the probate valuation (x 50% obviously) minus his personal allowance, if this produces a +ve number then he will owe tax at 18% and /or 28% depending on his income that tax year

Note if no IHT was paid at the time of mother's death then HMRC have not yet accepted that the probate valuation is correct so they may well challenge the figure you use if its unrealistic.

Tykva

00ec25 wrote: »

as it has been your main home then no your husband will not have any CGT liability, assuming you moved into it immediately after her death. If you diod not then will you have exchanged contracts before 6/4/14? If yes then you will get the full 36 months of deemed ownership which may cover your entire period of ownership anyway since you say 3 years ago. If you exchange on/after 6/4/14 then it does matter what date you moved into the property as to whether the entire ownership period is exempt. Even so I very seriously doubt that any CGT would be payable because the taxable gain would almost certainly be covered by the personal allowance

your brother in law will however have a CGT liability and if his gain is more than his personal allowance then he will have to pay CGT. His taxable gain will be the difference between what you sell the property for and the probate valuation (x 50% obviously) minus his personal allowance, if this produces a +ve number then he will owe tax at 18% and /or 28% depending on his income that tax year

Note if no IHT was paid at the time of mother's death then HMRC have not yet accepted that the probate valuation is correct so they may well challenge the figure you use if its unrealistic.

Thank you! Actually my husband moved in even before she passed away (we weren't married then), cause she was in peace hospice. It will 4 years in May since he lives here. So there are no other taxes to be paid, except for CGT? stamp duty? Is there any way brother could avoid the CGT? maybe by reinvesting his share into another property? Thank you again!!!