Advice on capital gains tax

seall77

I'm looking for advice (or advice on where to get advice) on likely values of capital gains tax that I will owe if I sell my rented property. Basically I am deciding whether I should try and sell it now or am able to wait a few years.


I bought the property in 2010 and lived in it for 2 and a half years. I then moved in with my boyfriend and have rented the property privately for the past 19 months. I am aware that there is a 18 month window when you don't have to pay CGT but that this has now come to an end. I put all my savings into the flat and am reluctant to pay a hefty amount of the profit I have made to the tax man.


I bought the property in 2010 for 211k with a 158k mortgage. I have recently had it valued at approximately 295k.


I'm not sure who is best to speak to in order to be able to make decisions on real figures rather than guess work.


Any help would be greatly appreciated!!

cloo

Speak to an accountant. I have had mine give me a caculation on my former home (rented for last 8 years) so I know what to expect. It was less than I expected and if you have lived in the property yourself, there are quite a lot of allowances (for a start £40k, I think, extra allowed if it has been your principal residence), so it probably won't be that much, especially with mortgage outstanding.

You've had the good luck to make a profit, so I think one just has to suck it up and pay the tax!

macman

But this is your only property?

seall77

Yes it's my only property but I rented it out for the past 19 months. Am now living with partner in his flat.

seall77

Indeed, I know I will have to pay some CGT tax and am ok with that but am trying to minimise the amount to enable me to have a better chance of buying something a bit bigger.

cloo

Yeah, an accountant will know all the allowances, so best to get them to work it out and they will factor those in.

booksurr

seall77 wrote: »

Indeed, I know I will have to pay some CGT tax and am ok with that but am trying to minimise the amount to enable me to have a better chance of buying something a bit bigger.

you do not need an accountant. This is a very simple calculation and it's obvious you do not (yet) have any tax to pay

seall77 wrote: »

lived in it for 2 and a half years. I then moved in with my boyfriend and have rented the property privately for the past 19 months. I am aware that there is a 18 month window when you don't have to pay CGT but that this has now come to an end.

I bought the property in 2010 for 211k [STRIKE]with a 158k mortgage[/STRIKE]. I have recently had it valued at approximately 295k.

the calculation must be in months not years but this will serve as an illustration into which you can put more accurate figures yourself.

ownership period 2014 - 2010 = 4 years (48 months)
lived in "2.5" years. Note to make your figures add up to 4 years we will call it 29 months not 30 months
let period: 19 months - final 18 months of ownership = 1 month

gross gain : 295 - 211 (- EA and legal costs of buying and selling) = 84,000

LESS:
a) private residence relief : 84 x (29 months lived in + final 18 months of ownership= 47 months) / 48 months ownership = £82,250 of course using the correct figures will make this figure slightly different

b) Letting relief which is the lower of
i) the figure for PRR above: £82,250, OR
ii) the gain in the let period excl final 18 mths = 84 x (48-47=1)/ 48 months = £1,750, OR
iii) max allowed £40,000
so the lowest is £1,750

c) personal allowance £11,000

Net taxable gain: 84,000 - 82,250 - 1,750 - 11,000 = ZERO
It will be a long time before you have a net taxable gain on which any CGT will be payable since there is currently up to a further £49,250 of gain before you hit a +ve taxable gain and even then that excludes EA and legal costs !