Capital gains tax

KMMT

Hi, hoping someone can give me some advice.

In 2007 me & an ex partner brought a property. It was our only, & main home. Was meant to be our forever home but In 2010 we split up and I moved out. My partner stayed & I paid my half of the mortgage until January 2012.

In January 2012 we rented the property out. I paid tax on my half of profit we made (it was only about £35 so paid it through my employer - my tax code changed slightly. The reason we rented it out Is because we would of been in negative equity when we tried sell in 2011. (Rented with full permission of the mortgage company).

The beginning of January I moved back into this property. As house prices have now risen we decided to try sell it again so I can finally cut financial ties with my ex. (It is quite amicable however I am remarried).

We are now back in positive equity & I am walking away with the deposit I put into the house initially plus a little more. This is going to go on my next home that I am buying with my husband.

The question I have is am I liable for any Capiital Gains Tax?

Thanks.

KMMT

To add, when not living in the house I rented & did not own any other house.

bigadaj

It depends on the exact sums but it's unlikely you'll be due any capital gains tax. There is £40000 letting relief, as well as taking away the time you lived there, and or your ex, and assuming no other gains there is £10000 allowance presumably for each if you, so you'd have to have made a very large gain to pay anything.

KMMT

That's great, thank you.

jrtfan

Think I read on HMRC website no CGT is payable on the sale of your only or main home, have you checked there? Also you can deduct reasonable costs associated with selling the house, from the profit you make ie solicitors, estate agent fees, all that sort of stuff. That can help to bring the total down to under the £10k allowance.

00ec25

jrtfan wrote: »

Think I read on HMRC website no CGT is payable on the sale of your only or main home, have you checked there? Also you can deduct reasonable costs associated with selling the house, from the profit you make ie solicitors, estate agent fees, all that sort of stuff. That can help to bring the total down to under the £10k allowance.

sorry but CGT is not as simple as your quick read implies, bigadaj has mostly identified the position:
- the gain is split between the 2 owners according to their respective ownership shares so for a property that has just returned to positive equity that could be a small number to start with
- it was once the OP's main home so is exempt for that time period (plus the final 18 months of ownership)
- assuming that the OP was not a lodger but was in fact a tenant when he lived elsewhere in rented means that the rented property was his main home even though he did not own it (the requirement is to have a legal interest such as a tenancy in another property, not whether you own only one property) and so making his owned property liable for CGT for the period he moved out (2010 - Jan 2012)
- because it was once the main home the OP can also claim letting relief of up to £40,000 against the portion of the gain arising in the let period (Jan 2012 to Jan 2014)
- the personal allowance is £11,000 not £10k

given the above the OP is liable for CGT but very possible that it is covered in full by available relief leaving nothing to pay, but to be sure OP will need to provide some numbers so we can do the calculation:
- original purchase price, expected selling price, month of purchase in 2007 and month in 2010 he moved out

KMMT

Purchase price august 07 £235k
Selling price £242k

I moved out October 10 & stayed at friends. This eventually became wgere I stayed until October 13. In January 14 I moved back into house to sell it. I continued to pay mortgage until January 2012 as my ex stayed here. He moved out & it was let from January 12 until January 14.

I made £35 per month in profit when renting & paid the relevant tax on this via my employer. (Hmrc adjusted tax code as such a small amount).

Thanks