Do I pay Capital Gains Tax on our house when I have moved out due to separation

Gar63

My partner and I (we were never married) bought a house 25 years ago, for £35,000, we recently split up and I have had to move out, this was 3 years ago.

We are trying to sell the house, for £320,000.

I am renting another property to live in due to these circumstances, will I still get Private Residence Relief when we sell the house? Or, will I have to pay Capital Gains Tax and how much?

Innys1

Gar63 wrote: »

My partner and I bought a house 25 years ago, for £35,000, we recently split up and I have had to move out, this was 3 years ago.

We are trying to sell the house, for £320,000.

I am renting another property to live in due to these circumstances, will I still get Private Residence Relief when we sell the house? Or, will I have to pay Capital Gains Tax and how much?

Last three years after you lived there are exempt from CGT anyway, so the fact you weren't living there is irrelevant.

Short answer then, is "No CGT to pay".

ViolaLass

Tried Googling? There are HMRC documents on this.

booksurr

gross gain 285, and assuming 50/50 ownership: your share = 142.5
you get PRR for the 25-3 years you lived there and, because of that, you get the final 18 months (1.5 years) added to your PRR entitlement as the "deemed occupancy" period

PRR 142.5 x (23.5/25) = 133.95
net taxable gain : 142,500 - 133,950 - 11,100 (personal allowance) = ZERO

your gain is fully covered by relief and allowance

booksurr

Innys1 wrote: »

Last three years after you lived there are exempt from CGT anyway,

WRONG. The rule changed wef April 2014, deemed occupancy period now reduced to 18 months

buglawton

But not changed retrospectively? So still 3 years relief Prior to April 2014 and 18 months after?

booksurr

buglawton wrote: »

But not changed retrospectively? So still 3 years relief Prior to April 2014 and 18 months after?

google it and update yourself if it personally affects you ...

"The amendments made by this section have effect in relation to disposals
(a) made on or after 6 April 2014, or
(b) made before that date under a contract, unless the conveyance takes
place before 6 April 2015."

bear in mind for tax law the date you enter into an unconditional contract is what determines the disposal date hence the "concession" at (b)

Gar63

OK, all good stuff, THANK YOU VERY MUCH, what if the house doesn't sell for another 2 or 3 years (the market is slow) will i have moved over the margin that means I'll have to pay some tax?

Gar63

OK, all good stuff, THANK YOU VERY MUCH,

can I ask you one more question as the maths seems to be no problem for you.

What if the house doesn't sell for another 2 or 3 years (the market is slow) will i have moved over the margin that means I'll have to pay some tax?

Innys1

Gar63 wrote: »

OK, all good stuff, THANK YOU VERY MUCH,

can I ask you one more question as the maths seems to be no problem for you.

What if the house doesn't sell for another 2 or 3 years (the market is slow) will i have moved over the margin that means I'll have to pay some tax?

It depends on how much the price goes up and whether or not there is an associated increase in the annual CGT allowance.

Odds are, yes, you will have to pay some tax. If you want to avoid that, it may be worth pricing "competitively" to sell soon.

booksurr

Gar63 wrote: »

OK, all good stuff, THANK YOU VERY MUCH, what if the house doesn't sell for another 2 or 3 years (the market is slow) will i have moved over the margin that means I'll have to pay some tax?

that isn't even GCSE level maths, work it out yourself by reading #4 above, but the calculation must be in whole months not in years (eg buy on 31 July and sell on 1 Aug = 2 whole months of ownership) hence the deemed occupancy period is expressed as 18 months