Cutting tax

Cutting tax

We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

Is CGT on house sale pro-rata?

Posts: 1,136 Forumite
Part of the Furniture 1,000 Posts Name Dropper
edited 30 January 2018 at 3:16PM in Cutting tax
I'm trying to help a neighbour with their SA (talk about "the blind leading the blind"!)

She sold her previous home after buying another one. It took a long time to sell so she missed the 18 months grace period by a few months.

The question then is will her CGT bill be for the whole amount or be worked out pro-rata? So, if it took 2 years to sell the house would she owe the complete amount or would the liability just be for the last 6 months?

Welcome!

It looks like you're new here. Sign in or register to get started.

Comments

  • Posts: 0 Newbie
    Eighth Anniversary 1,000 Posts Photogenic Name Dropper
    edited 29 January 2018 at 2:34PM
    You are mixing up two different reliefs. The one you wish to use is (for nominating as your main home) two years, not eighteen months.You need only worry about the eighteen month rule if no nomination was made within two years of owning two homes. Even then, one would imagine that any gain would be covered by PPR but ...... we need numbers in that case.

    https://www.gov.uk/tax-sell-home/nominating-a-home
  • Posts: 1,136 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Thank you for your reply.

    Unfortunately my neighbour missed the nomination deadline.
  • Contessa wrote: »
    Thank you for your reply.

    Unfortunately my neighbour missed the nomination deadline.

    How long did your neighbour have two houses for?

    There are two issues here and perhaps some of the CGT experts on here can advise further on the first.

    1) the position needs clarified if your neighbour owned two houses for less than two years. Is it necessary to make a nomination in that case? I must admit that I do not know the answer to this.

    2. Even if your neighbour owned two houses for, say, 22 months, only the last 4 would be chargeable to CGT on a pro rata basis. For example:

    House owned ten years. Loved in as main residence for 98 months. Bought another at that time.

    Last eighteen months exempt.
    We have 116/120 of the gain covered by PPR. You also have the annual exemption of £11300 and selling costs to include.
  • Posts: 1,136 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 22 January at 2:51PM
    How long did your neighbour have two houses for?

    There are two issues here and perhaps some of the CGT experts on here can advise further on the first.

    1) the position needs clarified if your neighbour owned two houses for less than two years. Is it necessary to make a nomination in that case? I must admit that I do not know the answer to this.

    2. Even if your neighbour owned two houses for, say, 22 months, only the last 4 would be chargeable to CGT on a pro rata basis. For example:

    House owned ten years. Loved in as main residence for 98 months. Bought another at that time.

    Last eighteen months exempt.
    We have 116/120 of the gain covered by PPR. You also have the annual exemption of £11300 and selling costs to include.


    Thank you,

    She owned two houses for 22 months (bought house 2 in February 2015 and sold house 1 in December 2016)
  • So I made a good guess. Perhaps someone will answer my first question in due course.
This discussion has been closed.
Meet your Ambassadors

Welcome!

It looks like you're new here. Sign in or register to get started.

Categories

  • All Categories
  • 347.2K Banking & Borrowing
  • 251.6K Reduce Debt & Boost Income
  • 451.8K Spending & Discounts
  • 239.5K Work, Benefits & Business
  • 615.4K Mortgages, Homes & Bills
  • 175.1K Life & Family
  • 252.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.