Capital gains tax question

another_casualty

My brother became an accidental landlord . He let his place out, while staying with me for 5 years . I kept telling him to get an accountant and declare his earnings ( from day one ), but he knew better( or so he thought).
Anyway , he is now in the process of filling out a do2 form .He got accounting help in the end.They gave him an estimate of what he could pay .hmrc .
He has had no income letting out his property since June last year , and moved back into his flat.
My question is , would he have had to pay capital gains tax if he sold his flat,or is cgt a tax for people with more than 1 property?

He has my brain sozzled

Thanks

chucknorris

another_casualty wrote: »

My brother became an accidental landlord . He let his place out, while staying with me for 5 years . I kept telling him to get an accountant and declare his earnings ( from day one ), but he knew better( or so he thought).
Anyway , he is now in the process of filling out a do2 form .He got accounting help in the end.They gave him an estimate of what he could pay .hmrc .
He has had no income letting out his property since June last year , and moved back into his flat.
My question is , would he have had to pay capital gains tax if he sold his flat,or is cgt a tax for people with more than 1 property?

He has my brain sozzled

Thanks

It is not exclusively for people with more than one property, he may have to pay CGT, it depends if there is a taxable gain. In addition to the usual expenses and allowances he will also be able to claim the following:

Private residence relief (pro rata of the time that it was his main home, plus 18 months, e.g. if he let it out for 5 out of 10.5 years of ownership) then he will get 66.67% relief of the taxable gain

Letting relief, whichever is the lower of:
a) £40k
b) The amount of private residence relief (e.g. if his private residence relief was £30k, then his letting relief would be capped at £30k).

CLAPTON

another_casualty wrote: »

My brother became an accidental landlord . He let his place out, while staying with me for 5 years . I kept telling him to get an accountant and declare his earnings ( from day one ), but he knew better( or so he thought).
Anyway , he is now in the process of filling out a do2 form .He got accounting help in the end.They gave him an estimate of what he could pay .hmrc .
He has had no income letting out his property since June last year , and moved back into his flat.
My question is , would he have had to pay capital gains tax if he sold his flat,or is cgt a tax for people with more than 1 property?

He has my brain sozzled

Thanks

the general principle of cgt is that tax is chargeable on any capital gain.
for property, there is an exception for properties that were your one and only HOME for the whole period of ownership (i.e. your typical home owner doesn't pay when selling)

so if you own a single property but don't live there then cgt is payable
if you lived there for part of your ownership, then the situation is explained in chuck's post above with allowance of
-PRR
-letting relief
-cgt allowance of 11,100

another_casualty

Thanks . It's all too taxing ( on the brain ) really. Sorry .)
He bought the flat ( his home) back in 2005.
He let it out from 2011- 2014 . He sent a payment to hmrc, for approx £3,500. Once he completes the do2 form, hmrc will decide how much he owes / if the payment is correct etc.
I / he is hoping he doesn't have to cough up a bigger amount . Still, if only he got an accountant from day one ...

CLAPTON

another_casualty wrote: »

Thanks . It's all too taxing ( on the brain ) really. Sorry .)
He bought the flat ( his home) back in 2005.
He let it out from 2011- 2014 . He sent a payment to hmrc, for approx £3,500. Once he completes the do2 form, hmrc will decide how much he owes / if the payment is correct etc.
I / he is hoping he doesn't have to cough up a bigger amount . Still, if only he got an accountant from day one ...

D02 form is about the rental income

cgt is about profit when selling: whether he will pay cgt depends (like all tax issues) upon the details : if you wish to give the necessary details then we could work out whether cgt is payable

another_casualty

Thanks Clapton . Very kind of you . Tbh , I think at the moment , it's best to do nothing just yet . I can't see him selling anytime soon and he flaps like a budgie as it is