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Capital gains tax and right to buy
Smokefree
Posts: 1 Newbie
Hello.
I have a council house which I've had for many years. 2 years ago I met my fiance and he has a flat with a mortgage. In June last year he moved in with me, rented out his flat, and changed all his a dress details to here. Renting out the flat has been painfully stressful due to the incompetence of the freeholder which caused the tenants to pay no rent for 3 months, we discussed our options and have decided to sell his flat and then buy my house jointly in June with my right to buy discount.
His flat was purchased 2.5 years ago, his first property, for 94995. We have just put his flat on the market with an asking price of 120000, we have received an offer at the asking price, but there is several more viewings booked in for Saturday so all final maximum offers will be submitted to us on Monday. So far so good.
When he bought this flat, he had a deposit of 25000, so if it sells at 120000, we look to have a good cash lump sum. We intend to use this to pay all selling costs and fees, pay 2k off our wedding, and pay 5k to clear our debts, and use the remainder towards a deposit when buying this house through right to buy scheme. Are we liable to pay capital gains tax? We only actually made around £320 profit from letting the flat as we used the income to pay his mortgage. I'm due a discount of around 61000 under the right to buy scheme. I've tried reading up on capital gains tax but in all honesty, I don't understand it and can't apply the information to our circumstances. I never ever thought I'd be in a position to become a homeowner, many years ago I was was homeless after fleeing a violent partner- fleeing with only the clothes on my back, so this is all rather new ground for me!
I have a council house which I've had for many years. 2 years ago I met my fiance and he has a flat with a mortgage. In June last year he moved in with me, rented out his flat, and changed all his a dress details to here. Renting out the flat has been painfully stressful due to the incompetence of the freeholder which caused the tenants to pay no rent for 3 months, we discussed our options and have decided to sell his flat and then buy my house jointly in June with my right to buy discount.
His flat was purchased 2.5 years ago, his first property, for 94995. We have just put his flat on the market with an asking price of 120000, we have received an offer at the asking price, but there is several more viewings booked in for Saturday so all final maximum offers will be submitted to us on Monday. So far so good.
When he bought this flat, he had a deposit of 25000, so if it sells at 120000, we look to have a good cash lump sum. We intend to use this to pay all selling costs and fees, pay 2k off our wedding, and pay 5k to clear our debts, and use the remainder towards a deposit when buying this house through right to buy scheme. Are we liable to pay capital gains tax? We only actually made around £320 profit from letting the flat as we used the income to pay his mortgage. I'm due a discount of around 61000 under the right to buy scheme. I've tried reading up on capital gains tax but in all honesty, I don't understand it and can't apply the information to our circumstances. I never ever thought I'd be in a position to become a homeowner, many years ago I was was homeless after fleeing a violent partner- fleeing with only the clothes on my back, so this is all rather new ground for me!
0
Comments
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You don't own the property being sold so you won't have any CGT liability. Your fiancee might though since he is the one who owns the property being sold. He will have certain reliefs though since the property was at one time his main residence. See this thread for the mechanics of the CGT calculation.
The rental income has nothing to do with CGT but will have been subject to income tax. Has your finacee been declaring the rental income to HMRC?0
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