Gapital gains tax confusion - help

Sarahstew

Getting really confused with regards to residential relief and likely CGT if I sell - would welcome any advice.

I bought a property in 2001 for 58500

I married in aug 2002 and moved with my husband who was in the armed forces. The house remained in my name and rented out since oct 2002. The was our main residence although I was sole owner and responsible for all tax. Until we purchased our current home in aug 2013.

We are looking to sell property to our daughter the house was valued 130k but we would look to sell at 124k to enable her to avoid paying Stamp duty.

I pay basic rate tax.

Any advice or guidance on how much CGT likely to pay and how I evidence main residence and fill out self assessment- TBH any advice would be much appreciated

booksurr

Sarahstew wrote: »

I married in aug 2002 and moved with my husband who was in the armed forces. The house remained in my name and rented out since oct 2002. The was our main residence although I was sole owner and responsible for all tax. Until we purchased our current home in aug 2013.

hmm.. although a married couple are deemed to have only one main residence between them (the same property for both persons obviously) the fact that he has never been an owner of it negates the option of claiming employment related "absence" even though he is a member of the forces as he never occupied it whilst married to you and the new residence you bought in 2013 would make it very hard to claim there was an intention to occupy the property once he finished his posting.

so you are liable to cgt

Sarahstew wrote: »

We are looking to sell property to our daughter the house was valued 130k but we would look to sell at 124k to enable her to avoid paying Stamp duty.

I pay basic rate tax.

Any advice or guidance on how much CGT likely to pay and how I evidence main residence and fill out self assessment- TBH any advice would be much appreciated

the following is an approximate illustration, the actual calculation needs to be more detailed (months not years, exact figures, additional costs etc )....

- you are selling to a family member, so the amount she pays is ignored, you must use the market value ("connected person rule")

- gross gain 130 - 58.5 (- legal & EA fees on purchase and sale) = 71.5
owned for 15 years (2016 - 2001)
PRR period 1 year (2001 - "2002") + final 18 months of ownership = 2.5/15 x 71.5 = 11.916
letting relief, clearly with it having been let for 12.5/15 years ownership (you do not double count the final 18 months of ownership) the LR is restricted to the PRR value as that is the lowest amount out of the 3 figures: PRR , 40k or gain in let period

taxable gain 71.5 - (PRR) 11.916 - (LR) 11.916 - personal allowance 11.1 = 36,568

the amount of tax you pay depends on your exact figures, but some will be 18% and some will be 28%
you will pay CGT at 18% on the difference between higher rate tax threshold 43,000 and the total of your taxable income (salary + other income subject to income tax)
you will pay CGT at 28% if your total income + 36,568 is more than 43,000

silvercar

Any merit in transferring to tenants in common (with spouse) before sale, to utilise 2 lots of CGT allowance? I'm thinking £11.1k of CGT allowance could be utilised if a portion was transferred over. Obviously, no PPR or LR would be available on the portion passed over.