Capital gains tax

kaz13

Can someone please tell me, which forum to post a question about how much capital gains tax, we need to pay on selling our house, we used to live in and own to our son, he has lived thereall his life, but the last ten years on his own after we inherited another house and moved out ?

G_M

This forum.

Value of property 10 years ago when you moved out?

Value today? (not sale price if you are selling to son at below market value).

https://www.gov.uk/topic/personal-tax/capital-gains-tax

antrobus

kaz13 wrote: »

Can someone please tell me, which forum to post a question about how much capital gains tax, we need to pay on selling our house, we used to live in and own to our son, he has lived there all his life, but the last ten years on his own after we inherited another house and moved out ?

No, unless you provide numbers and dates.:)

As I understand things, it works this way,

You bought a house in XXXX year and paid £A
You sold a house in YYYY year and received £B

Your capital gain is £B - £A which accrued over Z years

You claim Private Residence Relief for the years in which the house was your main home, before you moved into that inherited property and made that your main home, plus the last 18 months.

So the capital gain would be apportioned over time, roughly 8.5 years divided by Z years. You have a CGT allowance of £11,300. Anything over that and you pay 18%.

Of course, I don't really do tax, and someone else might know better. Paying a proper accountant for advice is an option.

kaz13

We bought the house in 1985 for £40,000 - we lived in it until 2006, we have sold it to our son for £150,000 but have gifted him £50,000. Towards it.
Can you work out roughly what you think the tax should be ?
It seems very confusing

kaz13

The market value was £150,000 then the gift so be pays £100,000.

kaz13

We are both self employed, own our own business, we fill tax returns in and pay tax etc.,

Keep_pedalling

Does letting relief apply if you let a relative live in the property rent free?

kaz13

I have been on the government website - but it is so so confusing, and doesn't seem to ask the right questions, or give any figures!
I've tried to work it out with the details above, but don't understand it proper - sorry.
Thank you all for your help.

silvercar

kaz13 wrote: »

The market value was £150,000 then the gift so be pays £100,000.

For CGT purposes it counts at market value, as you are related.

SO you have a gain of £110k.

You have owned it for 32 years of which 21 years it was your PPR. So you are exempt for 22.5 of the 32 years (PPR + last 18 mths).

So roughly £32.6k is subject to CGT. That would be £16.3k for you and your spouse.

You each have a CGT allowance of £11.3k leaving £5k to be taxed for CGT. Tax rates are 18% or 28% depending on your other income.

silvercar

G_M wrote: »

This forum.

Value of property 10 years ago when you moved out?

Value today? (not sale price if you are selling to son at below market value).

https://www.gov.uk/topic/personal-tax/capital-gains-tax

Value when you moved out is irrelevant. The gain is assumed to be linear between when you bought and when you sold.

Keep_pedalling wrote: »

Does letting relief apply if you let a relative live in the property rent free?

Don't think so. If you aren't receiving a rent, then the property isn't let in the commercial sense.

kaz13

silvercar wrote: »

For CGT purposes it counts at market value, as you are related.

SO you have a gain of £110k.

You have owned it for 32 years of which 21 years it was your PPR. So you are exempt for 22.5 of the 32 years (PPR + last 18 mths).

So roughly £32.6k is subject to CGT. That would be £16.3k for you and your spouse.

You each have a CGT allowance of £11.3k leaving £5k to be taxed for CGT. Tax rates are 18% or 28% depending on your other income.

This Makes sense, thank you.