Calculating capital gains tax

swindiff

I have tried searching on-line but have been unable to find a definitive way to calculate what capital gains would be due, if any, for a property that has been part let and part lived in as a main residence.

I bought a property in Oct 2013 for £165k + purchase costs. I did a basic renovation at a cost of about 3k and let it out in Dec 2013. The property was always intended to be my residence with my partner but we were not ready to live together at the time but could see house prices were on the rise so made our purchase then.

We intend moving into the property together around June 2016 and getting married the following year. The current value is around £220k

The property is currently in my name only, my partner has a property to sell so when we move in together that will be sold and we will re-mortgage the property we will be living in, in both our names with 50/50 ownership.

My salary is £40k and my partners is around £15k, although we expect that to rise to around £25k after the move.

My question is, how long would we need the property to be our main residence for, to not be liable for any capital gains tax. Is there a formula somewhere for capital gains on properties that have been part let, part lived in?

Thanks

marksoton

swindiff wrote: »

Is there a formula somewhere for capital gains on properties that have been part let, part lived in?

Yes, and your accountant will provide it.

Why ever would you ask people on the internet to give advice on such a complex/important/detailed issue?

swindiff

There is lots of great and useful information on the internet, that is the main point of this forum surely. If there is a formula then it should be simple to apply it to my case, its just a case of applying the relevant variables pertinent to my particular case to see if any capital gains would be due. Why would I need an accountant for that?

Pixie5740

If you move into the property and use it as your only or main home then you will get some Private Resident Relief.

https://www.gov.uk/tax-sell-property/work-out-your-gain

However, I'm not exactly sure what will happen in your case as part of the ownership will be transferred into your partner's name so the gain might be calculated from when you bought the property to when it is transferred into joint names (I'm assuming you are not married).

marksoton

swindiff wrote: »

There is lots of great and useful information on the internet, Agreed that is the main point of this forum surely. Maybe If there is a formula then it should be simple to apply it to my case,I disagree its just a case of applying the relevant variables pertinent to my particular case to see if any capital gains would be due. Why would I need an accountant for that? Because you need professional indemnified advice.

With all due respect it's hardly a simple question is it. By your own admission you've currently failed to find the information you need.

Pay a professional and have piece of mind.

POPPYOSCAR

Pixie5740 wrote: »

If you move into the property and use it as your only or main home then you will get Private Resident Relief.

https://www.gov.uk/tax-sell-property/work-out-your-gain

However, I'm not exactly sure what will happen in your case as part of the ownership will be transferred into your partner's name so the gain might be calculated from when you bought the property to when it is transferred into joint names (I'm assuming you are not married).

Yes, it would be better to get married before you transfer the property into joint names as there is no liability for transfers between spouses. If you do it before there will be a liability for capital gains.

POPPYOSCAR

OP If I were you


I would move into the property as planned. Keep it in your name only until you get married and then put it in joint names.

swindiff

So am I right in thinking that if I transfer equity/re-mortgage in both our names, before we are married then that counts as a sale and is liable for capital gains tax. If we are married then this is not the case?

My initial enquiry though is how long would we need to be resident to not be liable for any tax. We would be married if in the future we did decide to sell and move.

Bluebirdman_of_Alcathays

swindiff wrote: »

So am I right in thinking that if I transfer equity/re-mortgage in both our names, before we are married then that counts as a sale and is liable for capital gains tax. If we are married then this is not the case?

My initial enquiry though is how long would we need to be resident to not be liable for any tax. We would be married if in the future we did decide to sell and move.

Disposals between husband and wife aren't chargeable, correct.


It's impossible to answer your initial question as we do not (and cannot) know what the sale price will be when you eventually come to sell, and what, if any, reliefs you will be entitled to at this unknown date in the future.

swindiff

Assuming sale price is current valuation

Pixie5740

We don't know what the CGT legislation will be if/when you eventually come to sell the property though. The property has been let out for some of the time so CGT might be payable. Just because you will at some point be using it as your own, or main residence at some point in the future doesn't wipe out the fact that the property has been let.

Getting married won't wipe out the period was let for either but it might reduce your CGT liability because then you will have 2 CGT annual allowances to use instead of 1.