Capital gains on selling private property

Kashstrap

Yes it was a new-build and sold to us at below market value but I'm not sure if he paid CGT.

Mattygroves2

He should have paid income tax on any profit he made (or at least included both income ad expenditure if he made no profit) on his tax return for that year. However, it may be that he declared a higher figure. What figure was reported to the Land Registry when you bought it as that is what drives your acquisition cost ?

Could you remortgage the property on a BTL basis to release some money from it without having to sell ? It will depend on the rent you're getting but if it would cover the mortgage interest at 6% plus 25% the you may be able to mortgage up to 75% of the value.

Then take a long hard look at your business and whether it is worth trying to save it or you'll be in the same situation in a few years time.

CLAPTON

Kashstrap wrote: »

No refurb. House was built for us by my father hence the price however its market value was £450000. Very sad to sell. Unfortunately we borrowed more over the years to run the business.

as you and your father are 'connected' person as far as HMRC are concerned, then it's likely that the relevant acquisition price would be the market value and not what you actually paid your father.
However, you may want to talk to your father and see what he declared to HMRC at the time of disposal.

In any event your cgt liability is relatively small.

00ec25

you refer to we but have not confirmed the ownership arrangement
if both of you own the property then the gain of £570,000 is split between you in accordance with your ownership shares

this matters because the Private Residence Relief and the Letting Relief are both per owner so as it was the main home then you each get up to 40K letting relief, which would therefore absorb all your gain without the need for using the personal allowance at all

mattygroves has correctly worked the time apportionment numbers but has forgotten that the letting relief is available to both of you, so assuming joint 50/50 ownership his figures should be:
gain per owner 570/2 = 285
PRR per owner = 527,383/2 = 263,692
LR per owner = 21,308
net gain zero , no tax payable

as you can see the fact there are 2 owners means the letting relief is well within the 40K cap and so it and PRR fully absorbs the gain

do follow up on Clapton's query as he correctly questions the connected persons status and so whether market value should be used as the original cost