Capital gains on swelling a flat.

vivvov

Hi All

Capital Gains Tax..can someone explain as for a dummy.

I've a flat..went to Uni to do a Masters..and rented the flat.
I rented it for 3 years and started living back there in August 2014.
I've been back living there since then and it's my only property.
The flat's in east London, it's a one bed ex council, so it's appreciated in value but it's no palace. Still, it's London and from looking at Rightmove historical sales..a guesstimate is it's increased in value by £50k-£70k (that is mind boggling in itself).
Thinking of selling it and moving out of London.

I don't understand CGT. Will I be potentially be liable for paying any Capital Gains Tax?

Thanks in advance.

Vivvov

gingercordial

gregsayer wrote: »

if its your only property, and the majority, if not all the funds raised will go to your new property, there is no cash gain to be taxed on.


now if you were downsizing, then maybe there would be on the remaining monies from the transaction.

gregsayer you seem to have confused yourself with rollover relief for business assets. The amount of money reinvested into property has no bearing on this scenario.

OP, you should get some combination of Private Residence Relief and Letting Relief that will mitigate some or all of your gain, along with your annual allowance for tax-free gains. A few more details would allow a calculation, ie date of purchase, purchase price (you can also add on legal fees and stamp duty), whether you lived there at all to start with, date you moved out, rental dates and date you moved back in, estimated selling price less selling fees.

booksurr

gregsayer wrote: »

if its your only property, and the majority, if not all the funds raised will go to your new property, there is no cash gain to be taxed on.

now if you were downsizing, then maybe there would be on the remaining monies from the transaction.

utter rubbish

vivvov wrote: »

I've a flat..went to Uni to do a Masters..and rented the flat.
I rented it for 3 years and started living back there in August 2014.

so you LET the flat for 3 years (or if you must you rented it "out"). I assume you do not mean you "rented" it since that would mean you were a tenant not a landlord

vivvov wrote: »

Will I be potentially be liable for paying any Capital Gains Tax?

yes you are liable, how much you will actually pay depends on the net gain and what relief you can claim based on the exact date of ownership and when you lived there as your main residence. Please note that simply owning one property does not make it your main residence if you live somewhere else, for example, as an PG student you may have lived at parental home as well?

see this example of the mechanics of the 5 step calculation for CGT subject to PRR and LR
http://forums.moneysavingexpert.com/showpost.php?p=69071134&postcount=6

xylophone

Capital gains on swelling a flat.

Sounds painful!:eek:

cloo

I got my accountants to estimate my CGT when I sold the former home I had been renting - as they had done accounts for me for a while, they did it as a freebie; if you have an accountant, ask them.

Helvetica_Van_Buren

Capital gains is related to the disposal (sale) of an asset.

The rent you made will be subject to income tax - it's considered alongside your other sources of income, such as wages, pension etc.

vivvov

Thanks for the replies..I knew it wouldn't be simple!

More details:
Owned the flat since 2002.
Then rented the flat via a letting agent from September 2011 to August 2014 and lived on boat whilst at Uni ..lived on a narrowness but not residential mooring so used my parents address as 'official' address.
Rent wise I filled in yearly tax form and paid the necessary tax on rental income for the period I rented out my flat.
Then moved back in after the tenant exited..started back up paying my council tax, water bill etc ...became my primary residence again and have been living and working in London since.

So rented it for just under approx 3 year period since 2002..back in it coming up for my second year in August 2016.

Now thinking of s(w)elling it ....before it busts open!

Hope the extra details help?

vivvov

OP, you should get some combination of Private Residence Relief and Letting Relief that will mitigate some or all of your gain, along with your annual allowance for tax-free gains. A few more details would allow a calculation, ie date of purchase, purchase price (you can also add on legal fees and stamp duty), whether you lived there at all to start with, date you moved out, rental dates and date you moved back in, estimated selling price less selling fees.[/QUOTE]


....forgot to add the purchase price..£105k in 2002.and expect it would sell at the moment for around £290k (similar property just sold for that price).

vivvov

booksurr wrote: »

utter rubbish

so you LET the flat for 3 years (or if you must you rented it "out"). I assume you do not mean you "rented" it since that would mean you were a tenant not a landlord

yes you are liable, how much you will actually pay depends on the net gain and what relief you can claim based on the exact date of ownership and when you lived there as your main residence. Please note that simply owning one property does not make it your main residence if you live somewhere else, for example, as an PG student you may have lived at parental home as well?

see this example of the mechanics of the 5 step calculation for CGT subject to PRR and LR
http://forums.moneysavingexpert.com/showpost.php?p=69071134&postcount=6

Thanks for the link to the calculation booksurr

vivvov

booksurr wrote: »

utter rubbish

so you LET the flat for 3 years (or if you must you rented it "out"). I assume you do not mean you "rented" it since that would mean you were a tenant not a landlord

yes you are liable, how much you will actually pay depends on the net gain and what relief you can claim based on the exact date of ownership and when you lived there as your main residence. Please note that simply owning one property does not make it your main residence if you live somewhere else, for example, as an PG student you may have lived at parental home as well?

see this example of the mechanics of the 5 step calculation for CGT subject to PRR and LR
http://forums.moneysavingexpert.com/showpost.php?p=69071134&postcount=6

...did the calc based on months primary address and months rented up until December 2016 as a selling date..105 as the original cost to me..used £280k as a final selling amount...did it roughly on the back of an envelope and maths (amongst many other things) isn't my strong suit...but the amounts seem to indicate no CGT to pay..
180k - 160k-20k-11k=well below 0