Capital Gains tax on second property

enthusiasticsaver

I have been reading up on capital gains tax on second properties and would value advice of those more in the know. In 2004 my mum purchased a coastal flat in Cornwall in the town I live in with the express purpose it would be used for family and friends to use when they came down to visit us. It was purchased outright as a gift in the name of me, my sister and brother. Three way split as tenants in common. No mortgage and it has never been let out. It was purchased in cash for £225,000 and let's say for arguments sake purchasing costs were £5k to cover stamp duty and solicitor/survey costs.

We have just agreed a sale price 13 years later of £280k as the flat is rarely used due to ill health of my mum, stepdad and brother so they can no longer make the 4 hour journey down from their homes in London. I think that me, my sister and brother are liable for capital gains tax and have done the following calculations.

Purchase price £225,000 plus £5,000 purchase costs is £230,000.

Sale price is £280,000 less estate agents costs £4,000 and solicitors costs £1,000 is £275,000.

Profit is therefore £45,000 which is £15,000 each. Yearly capital allowance for 2017/18 is £11,300 so we have to each pay capital gains of either 18% or 28% depending on our higher rate of tax on £3,700. Is that correct?

Also how do we pay this as none of us do self assessment as we are all paid via PAYE? I am a basic rate taxpayer and I think my sister would be. Not sure about my brother.

Can anyone help?

Keep_pedalling

You can report the gain through HMRCs real time CG service.

https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax.

I don't think you can claim the buying exoenses, as your mother gifted you the house and presumably she paid those costs not you and your siblings.

If on the other hand any of you are sitting on any potencial losses such as long held bank shares now would be a good time to dispose of them to offset your gains.

00ec25

as above, the purchase costs do not form part of the market value of the property at the point of the gift to the 3 of you as "connected persons" since it was your mother who paid those costs, not "you"

so the gross gain is 50k and each person's taxable gain, net of personal allowance, is £5,366 which at the worst possible outcome (all @ 28%) would mean paying £1,502.48 in tax out of the £93,333 share of the gross sale you will each receive