CGT query

nixinix

I brought a house in December 2003 for £88500 (cash purchase) in my name only.

I have never lived there, nor intended to.

My father has lived there since purchase, rent free until I took a £30k buy to let mortgage (only option available to me in my circumstances) out and he has covered those costs (the mortgage was to cover his debt, he lost a court case he expected to win).

He now has no means to pay the mortgage monthly, nor do i, so I have sold the house (currently due to complete end of August) for £113,800 to clear the mortgage.

Is this right for cgt?

£113,800 - £88,500 = £25,300 profit
£25,300 - my allowance £9,200? - costs (tbc, aprox) £4000 = £11,100
£11,100*40% = £4440 cgt payable

Have I missed anything? I have ignored the mortgage for the cgt cacl, is this right? Not looking at trying to work the system just ensure I've got it right as could really do without anymore stress.

My other query is for cgt, or any other reason that cgt could throw up, do you have to show where the money came from to buy the house? (All legal, just very complicated)


Nixinix

PS Don't worry about my dad he has somewhere to go I'm not making him homeless!!!;)

CLAPTON

you are also due a small discount due to 'taper relief' which means you can deduct 5% off the profit.

Probably too late now but if you are married you could have transferred half the house to your spouse and then used her 9,200 to reduce the CGT.

roger_c

I don't think you'd have to prove where the cash came from unless the Revenue were to ask you.

When you complete the capital gains tax supplementary pages of your tax return it doesn't ask for details of where the cash came from.

ksrao

jimmo wrote: »

Your profit 25300
less costs 4000
gain 21300
less taper 5%1065
chargeable gain 20235
exempt 9200
taxable 11035

That s treated as an addition to your taxable income. If you are already a 40% payer you will pay 40%but if you are a basic rate payer you will have the unused balance of you basic rate band before you have to pay 40%[/quote



Thanks Jimmo.Mine is slightly different. We rent the building for 4 yrs as we got our own house. We bought this buy to rent house for 95000 in July 2003 for ready cash and sold it for 123000 in January 2007.My expenses in the region of 2500. Do I get letting relief for this figure and how much?

ksrao

Thanks Jimmo for the explanation.