Selling flat: Capital Gains Tax

embutterfly

Hi all,

I really hope you can help me with this. I bought my flat in 2005 for £95,500 and have just sold it for £127,000 (just approaching exchange all being well).

I have owned the property for 129 months in total and lived in it for the first 66 months of this. My understanding of CGT is that this amount is therefore tax free plus the final 18 months - I calculated this to be a total of 84 months tax free (65%).

My workings out then leave £11,029 left to be taxable (65% of the gain - the gain was £31,500) but the CGT allowance is £11,100. To my mind this means I have no tax to pay, is that right? My maths is a little poor but I think I've calculated this all correctly.

Do I still need to declare this? I currently pay tax on my rental income through PAYE, so I'll need to ask for this to be stopped once I've paid what I owe (tenant moved out in May).

Many thanks for all your help. Really want to make sure I don't get this wrong.

booksurr

1. you have no CGT to pay

2. you must declare the calculation on the tax return as you are already required to submit a return therefore in respect of CGT you must declare it even though no tax is payable because the gross value of the sale is more than £44,400 (read the instructions on your tax return: x4 the allowance)

3. your calculation is wrong because you have not correctly read the guidance! Your PRR is correct at 65% but you have missed out letting relief. As you are required to do a tax return you will have to show the workings of the CGT calculation in box 37 (I think off hand) "any other info" (which is a free text box)

Correct calculation
Gain 31,50 (I assume that is net of buying and selling costs?)
PRR 31,500 x 84/129 = 20,512

LR lowest of a, b or c:
a) PRR: 20,512
b) gain in let period excl final 18 months 31,500 x ((129-84)=45)/129= £10,988
c) max allowed 40,000

net taxable gain: 31,500 - 20,512 - 10,988 = ZERO

your personal allowance is totally untouched (so sell some other investments and use it up - LOL).

you should have read this ?
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2016

embutterfly

Hi,

Thank you so much for your help.

The time I lived in the property was 66 months, I'd already added the final 18 months. Does this make a difference.

I don't complete a tax return and I'm not registered for self assessment as I pay tax on my rental income through my tax code (taken from my wages every month as the profit was minimal). Do I still need to inform the tax office?

booksurr

? 66 + final 18 = 84
either you lived there for 66 or you didn't, you cannot include the final 18 months twice either your PR is 66 in total or 84 in total, which is it?

read the guidance: https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

let us hope you declared your profit correctly (repayment mortgage by chance?) if you claim your profits were less than £2,500 pa (threshold below which you do not need to do a tax return abd can payt by code adjustment instead)

embutterfly

I did live there for 66, sorry I misread what you said.

embutterfly

Do I need to register for self assessment?

embutterfly

Does anyone know what I do next?

Bluebirdman_of_Alcathays

It is all there in the guidance link booksurr posted.

embutterfly

I can't see what I need to do if I don't complete a self assessment?

Penelope_Penguin

embutterfly wrote: »

I can't see what I need to do if I don't complete a self assessment?

Give HMRC a call. Explain your circumstances, and say that you need to file because you have a capital gain, but don't usually have to file. Make it clear that you only need to file for this one year, so that you don't receive a request in subsequent years.

https://www.gov.uk/register-for-self-assessment/overview

ETA - just seen that you say you "just" sold the flat. Is that in the current tax year, then? In that case, give HMRC a call, and they will clarify, but you may need to delay filing until April 2017, after the end of this tax year.

booksurr

Penelope_Penguin wrote: »

Give HMRC a call. Explain your circumstances, and say that you need to file because you have a capital gain, but don't usually have to file. Make it clear that you only need to file for this one year, so that you don't receive a request in subsequent years.

https://www.gov.uk/register-for-self-assessment/overview

ETA - just seen that you say you "just" sold the flat. Is that in the current tax year, then? In that case, give HMRC a call, and they will clarify, but you may need to delay filing until April 2017, after the end of this tax year.

waste of his call costs and both his and HMRC's time

he has NOTHING TO PAY and he most certainly does NOT need to register for SA. Therefore, as explained in the link I gave earlier, as someone not already within self assessment, he is not required to notify a calculation of zero liability

I will get my spoon out one last time: page 5