CGT Query Please

sun8eam

Dear MSE community,

I would really like your help calculating how much the tax man might take if i sell my home. I have recently moved out and am now living in another property which is now my main residence.

The facts:

Purchased in June 1995 for £67,995
Sold (hypothetically) in Decmber 2014 for £275.000
Lived in from June 1995 to February 2005
Rented out from February 2005 to February 2011
Lived in from March 2011 to October 2014
Property empty from October 2014 to present.

I am basic rate tax payer at the moment but I can fall into the higher rate tax bracket also as my salary is commission based, so estimates for both would be very helpful.

Thank you so much for your kind help.

sun8eam

silvercar

Rough calculations.

You've made about 200k profit after buying and selling costs.

The exact calculation is in months, but in years: you've owned it 19.5 years, all is exempt bar the time it was rented ie 6 years.

So 6 divided by 19.5 times 200 is about 61.5k.

You can then get letting relief (google it) which would be 40k. That leaves 21.5k.

You also have a personal CGT allowance if not used elsewhere which is £11k. leaving you 10.5k liable to tax at 18% or 28% depending on whether you are a higher or lower rate tax payer.

Hope that gives you a general idea.

steve2005

silvercar wrote: »

Rough calculations.

Hope that gives you a general idea.

Of all the calculations for CGT on here this is definitely the easiest to understand IMO.

sun8eam

Thanks silvercar.

booksurr

whilst Silvercar has summarised your likely position the 18% / 28% divide is based on your total earnings in the year of sale . It is not simply whether you are basic or higher rate taxpayer.

if your annual gross salary minus 10,000 income tax personal allowance, plus the 10.5k CGT liability, comes to more than £31,865 you will pay CGT at 28% on the amount in excess of 31,865. You would pay 18% on the amount up to 31,865

as you say some years overtime takes you over, then it is possible that you may have to pay some at 28% depending on the figures for that year

kinger101

Good point by booksurr. If you're in a financial position to do so, the year you sell your house might me a good one to make additional pension contributions.

sun8eam

Many thanks booksurr & kinger101.