CGT on shared ownership

catmeow50

I am looking for some confirmation that I have worked out my CGT liability correctly.

I am selling an apartment I own with my Dad. He has never lived there. I lived there from Dec 2008 until end April 2012 so 40 months living there.

I then rented out the apartment from May 2012 till April 2017 but with the 18 month leeway at the end that works out at 45 months letting.

My gain for that time is £36,820 which is my half, minus all fees etc.
So I calculated that I get £20,733.60 in PPR, £16086.41 letting relief (as this is the lesser of the 3 amounts you can use) and then my personal allowance of £11,300.

So £36,820 -£16,086.41 - £20,733.60 - £11,300 = a negative so I don't have to pay anything.

My Dad on the other hand has not lived there so gets no ownership allowance but does he still get the last 18 months leeway if he has never lived there and does he get any letting allowance? I can't seem to see a consistent answer to this.

Many thanks in advance for any help and apologies if I have missed anything relevant, I have never had to deal with Tax before and it;s a steep learning curve!

uknick

You must have lived in, or intended to live in (if you meet the criteria under the rules), a property to get PPR.


https://www.theguardian.com/money/2013/aug/08/avoid-capital-gains-tax-house


So, your father is not eligible for any relief, PPR or letting.

[Deleted User]

catmeow50 wrote: »

I am looking for some confirmation that I have worked out my CGT liability correctly.

I am selling an apartment I own with my Dad. He has never lived there. I lived there from Dec 2008 until end April 2012 so 40 months living there.

I then rented out the apartment from May 2012 till April 2017 but with the 18 month leeway at the end that works out at 45 months letting.

My gain for that time is £36,820 which is my half, minus all fees etc.
So I calculated that I get £20,733.60 in PPR, £16086.41 letting relief (as this is the lesser of the 3 amounts you can use) and then my personal allowance of £11,300.

So £36,820 -£16,086.41 - £20,733.60 - £11,300 = a negative so I don't have to pay anything.

My Dad on the other hand has not lived there so gets no ownership allowance but does he still get the last 18 months leeway if he has never lived there and does he get any letting allowance? I can't seem to see a consistent answer to this.

Many thanks in advance for any help and apologies if I have missed anything relevant, I have never had to deal with Tax before and it;s a steep learning curve!

IF you owned the property from December 2008 until April 2017 - that is 100 months. You have only 85 in your calculation. (The eighteen months does not reduce the period of ownership but increases the PPR). The PPR would appear to be 40 + 18 /100 or 58%.
While the end result is the same, you do have to provide the calculations. Maybe you would want to look at this again?

xylophone

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

https://www.tax.service.gov.uk/calculate-your-capital-gains/resident/properties/

catmeow50

I actually still own it now and have got a completion date of mid August so was calculating the time frame for the 18 months based on that. So I count it as 103 months so my PPR calculation was £36,820 x (58/103) = £20,733.59.

Then the letting relief I calculated at £36,820 x (45/103) = £16086.41 which is lower than the PPR and lower than £40,000 so assumed that was the right amount.

[Deleted User]

catmeow50 wrote: »

I actually still own it now and have got a completion date of mid August so was calculating the time frame for the 18 months based on that. So I count it as 103 months so my PPR calculation was £36,820 x (58/103) = £20,733.59.

Then the letting relief I calculated at £36,820 x (45/103) = £16086.41 which is lower than the PPR and lower than £40,000 so assumed that was the right amount.

Ah - fair enough. However letting relief would not apply from April 2017 as it was not let out - so 42/103.

Letting Relief doesn’t cover any proportion of the chargeable gain you make while your home is empty.

https://www.gov.uk/tax-sell-home/let-out-part-of-home

00ec25

catmeow50 wrote: »

I actually still own it now and have got a completion date of mid August so was calculating the time frame for the 18 months based on that. So I count it as 103 months

You purchased in Dec 08 and sold in Aug 17 so that is 105 months of ownership. The final 18 months therefore span from Aug 17 back to Mar 16 inclusive so the let period ending in April 17 overlaps the final 18 months

The PRR period is Dec 08 - Apr 12 (41 months) + final 18 = 59
The let period (excluding overlapping bit of the final 18) is May 12 - Feb 16 = 46 months
(sense check 59+46=105)

PRR 36,820 x 59/105 = 20,689
LR (lowest amount) 36,820 x 46/105 = 16,131

net taxable gain: 36,820 - 20,689 - 16,131 = zero
you will not need to use any of the CGT personal allowance

mandm65

00ec25 wrote: »

You purchased in Dec 08 and sold in Aug 17 so that is 105 months of ownership. The final 18 months therefore span from Aug 17 back to Mar 16 inclusive so the let period ending in April 17 overlaps the final 18 months

The PRR period is Dec 08 - Apr 12 (41 months) + final 18 = 59
The let period (excluding overlapping bit of the final 18) is May 12 - Feb 16 = 46 months
(sense check 59+46=105)

PRR 36,820 x 59/105 = 20,689
LR (lowest amount) 36,820 x 46/105 = 16,131

net taxable gain: 36,820 - 20,689 - 16,131 = zero
you will not need to use any of the CGT personal allowance

I am sorry to hijack this post but saves me having to create a new one.
In the above example if the property was jointly owned, i believe the PPR and Rental Relief (where applicable) would be divided by two, assuming both partners are on basic income tax band?

00ec25

mandm65 wrote: »

I am sorry to hijack this post but saves me having to create a new one.
In the above example if the property was jointly owned, i believe the PPR and Rental Relief (where applicable) would be divided by two, assuming both partners are on basic income tax band?

you believe incorrectly

• it is the gross gain which is divided according to whatever share each owns - that may, or may not, be 50/50
  
• each person then does the calculation as above based on their individual share.
  
• The PRR is is the PRR, it is simply a % of time fraction. Whether each owner has the same fraction depends on whether each person lived in the property for the same period and/or was married (to each other!) when doing so
  
• The LR limit of £40,000 is per owner.

see example:
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64738

the tax bracket (basic, higher, additional) of each person has no impact on the calculation of the net taxable gain for each person. It does obviously impact how much tax each will actually pay on their respective taxable gain figures (if these are >0 obviously)

mandm65

thanks for the correction