Capital Gains Tax - Can anyone advise please?

margf

I inherited 50% of my parents property in 2005 we have rented the property to date.

Can anyone advise what the CGT liability would be please, as we are in the process of deciding if we continue to rent it out or sell?

Thank you

xylophone

Do you mean that in 2005 you and another person inherited 50% each of the property and you are both now considering a sale?

https://www.gov.uk/tax-sell-property/work-out-your-gain

00ec25

why are you certain that the "improvements" are in fact allowable in full against the CGT?

Some of the £10,000 of work done could have been repairs not improvements, particularly given you were, i assume, refurbishing a house prior to (or whilst) letting.

margf

00ec25 wrote: »

why are you certain that the "improvements" are in fact allowable in full against the CGT?

Some of the £10,000 of work done could have been repairs not improvements, particularly given you were, i assume, refurbishing a house prior to (or whilst) letting.

I am not a big of the 10k was installing central heating and installing double glazing

margf

xylophone wrote: »

Do you mean that in 2005 you and another person inherited 50% each of the property and you are both now considering a sale?

https://www.gov.uk/tax-sell-property/work-out-your-gain

Thanks yes that is what I meant, I just didn't know what information was required to calculate the CGT.

antrobus

00ec25 wrote: »

why are you certain that the "improvements" are in fact allowable in full against the CGT?

Some of the £10,000 of work done could have been repairs not improvements, particularly given you were, i assume, refurbishing a house prior to (or whilst) letting.

Because the property has been let? If the £10,000 was "repairs" then the OP would have already claimed the cost as a deduction against rental income.

Keep_pedalling

margf wrote: »

I am not a big of the 10k was installing central heating and installing double glazing

That sort of improvement is not deductible, so after selling expenses and your annual CG allowance you will each have a taxable gain of around £10k which will be taxed at between 18 and 28% depending on your other income for the year (£1,800 - £2,800).

If you are sitting on any assets carrying significant losses like bank shares purchased or inherited some years ago now would be a good time to sell them as those losses would offset the gains in the property.

silvercar

I understood that installing central heating for the first time was a capital improvement.

Replacing existing windows with double glazing was considered a repair (mainly because double glazing costs are not much higher than single glazing).

Even so, the whole property has gained £35k, your share is £17.5k. You have a CGT allowance of £11.3k, if not used elsewhere. So worst case is that £6.2k to be charged at 18% or 28% depending on your marginal tax rate.

Also selling costs can be deducted from the gain.

00ec25

antrobus wrote: »

Because the property has been let? If the £10,000 was "repairs" then the OP would have already claimed the cost as a deduction against rental income.

How do you know? Given OP cannot get to grips with CGT how can you assume they got the income tax correct?

that is precisely why I questioned it as the OP (which has now been edited to remove all reference to the 10K) did not say what it related to other than the fact they were "improvements"

as it turns in responding to my comment you possibly missed Op's reply where it shows a ("large") part of the 10k is not eligible since it is repairs - whether Op has claimed those costs against the income tax is a different problem and one he is probably too late to correct now given the letting started in 2005 so I doubt replacement central heating and double glazing work would have been done as recently as the last 4 tax years

margf wrote: »

Thanks yes that is what I meant, I just didn't know what information was required to calculate the CGT.

CGT basics: https://www.gov.uk/capital-gains-tax/overview

"Gross gain" = actual selling price minus legal costs associated with its sale, estate agency fees associated with its sale.

"original cost" = value used for probate purposes. As you inherited the property you have no eligible costs associated with its acquisition.

"improvements": the costs of work done to the property where the work is NOT a repair. Double glazing is a repair. Central heating replacement (not first installation if none already there) is a repair

"personal allowance" (if sold between 6 April 17 - 5 April 18) = £11,300

net taxable gain liability: (gross gain - original cost - improvements cost) x ownership share (50%) - personal allowance = taxable value

tax payable: taxable value added to all other income you got this year = "total" income
assuming this figure is more than £45,000 AND that your all other income total is less than 45k.....

a) amount to be taxed at 18%: 45,000 - whatever your other income value is this tax year= amount of gain to be taxed at 18%
b) amount to be taxed at 28%: "total" income - £45,000 = remaining amount of gain to be taxed at 28%

margf

Thanks for all your replies, I now have some indication of what my liability will be and should we go down the selling route I will instruct an accountant to do my return.