Capital Gains tax rate

Mrs_pbradley936

We are considering selling a flat which my husband inherited approx 18 years ago. It is in our joint names. My husband is a higher rate income tax payer on a proportion of his earnings because as well as a pension he receives a retainer as a consultant to a company he sold when he retired. I am a basic only income tax payer.

We think the total gain on the property is around £50K so if we deduct our allowances of £1100 odd each and then our selling costs of about £2K our gain is going to be about £24K. Is that what we pay our tax on? Do we pay on £12K each and will his be more than mine because he has a larger income than I do?

I cannot find any information about how much the rates differ other that it might be 18% or 28% depending upon your circumstances. In our circumstance would I owe 18% of £12k and my husband 28% of £12K? The answer might make a difference between whether we sell it or not. Thanks.

roger_c

The 'taxable gain': I get £26k total therefore £13k each. £55-(2x11k)-2k = 26k


Your husband: as a higher rate taxpayer he will pay CGT at 28% on his 'taxable gain', giving him a CGT liability of £3,640.


You: if your total income (before tax) plus the £13k gain is less than £43,000 then you will be subject to CGT at 18% on the 'taxable gain', giving you a CGT liability of £2,340.


If you made any capital improvements e.g. upgraded kitchens, bathrooms, (which have not been claimed against any rental income received), then you may also be able to deduct these as a cost in calculating the gain.

booksurr

as roger-c says allowing for his typo that you say the gain is 50k not 55k

so each has a gain of 50k-2k costs = 48k

please confirm the joint ownership is 50/50 and (crucially) that corresponds with how you have been declaring the rental income profit for income tax purposes. If that is not the case, CGT is based on "beneficial ownership share" not legal ownership share, so will not be 50/50 if you split the income differently

assuming 50/50 you each have a gain of (48/2)-11,100 (personal allowance) = 12,900

he is already a HR taxpayer so as roger-c says all his gain is taxed at 28%

you will pay some at 18% and, if as roger c says, the total of your 12,900 gain + your gross other income subject to income tax equals more than 43,000, you will pay the amount over 43k at 28%

Mrs_pbradley936

Thanks for the replies and yes we own the place 50/50.

Keep_pedalling

Mrs_pbradley936 wrote: »

Thanks for the replies and yes we own the place 50/50.

But as the lower tax payer do you claim all the rental income?

booksurr

Mrs_pbradley936 wrote: »

Thanks for the replies and yes we own the place 50/50.

how did you split the rental income?

Mrs_pbradley936

The rental income is split jointly 50% each.

Mrs_pbradley936

Keep_pedalling wrote: »

But as the lower tax payer do you claim all the rental income?

No I do not. We each get 50% - I thought we had to seeing as we both own it. If I remember rightly it was one of the reasons to put it into joint names not just his when the relative died.