Capital Gains Tax: Moving Back Into Our Former Home

00ec25

pjcox2005 wrote: »

You then get letting relief which is the lowest of the following:
For you that will be £40,000 which gets deducted.

So your revised chargeable gain is £277,000 - £85,631 - £40,000 = £151,368 -40,000 = 111,368

You each get a personal exemption of £11,700 in this tax year so remove 2 * £11,700 leaving the taxable gain at £[STRIKE]127,968.[/STRIKE] £87,968

I'm assuming you're high rate taxpayers so the tax liability at 28% would be £35,831.

CGT is calculated for each owner individually, based on their respective share.

Therefore people often forget when doing consolidated calculations that you deduct 80,000, since there are two owners.

OP also states husband would be higher rate taxpayer, but has not given any info on her own tax status, so a portion of her liability may still fall into the 18% band since (assuming 50/50 joint ownership) her liability would be 43,984 all of which could, potentially, be in the 18% bracket since the 28% band starts at 46,350

00ec25

pjcox2005 wrote: »

But for Non-UK resident you'd only look at the gain since 6 April 2015. So assuming Dec 18 sale, that's the last 44 months of ownership.

So 44/372 * £277,000 = £32,763

yes, but that is not the default method.

The default is to be taxed only on the gain since 6 April 2015 - obviously that needs a (professional) robust valuation of the property at that date which will stand HMRC checking

you have to positively elect to be taxed as you have shown on the time apportioned basis over the whole ownership period.

Even then there is a 3rd method available if you elect for that instead:
the whole gain is time apportioned as you suggest, but then, using a count in exact days to time apportion the gain between pre and post 6/4/15, and only the portion of the gain since 6/4/15 is taxed.

The default "should" be the cheapest method for a property which is subject to long ownership and short PRR. Then method 3 as that avoids having to pay for a valuation should be next. Your method should (in theory) be the least tax efficient method given the property has made a gain over a relatively long period pre 2015.

pjcox2005

00ec25 wrote: »

CGT is calculated for each owner individually, based on their respective share.

Therefore people often forget when doing consolidated calculations that you deduct 80,000, since there are two owners.

OP also states husband would be higher rate taxpayer, but has not given any info on her own tax status, so a portion of her liability may still fall into the 18% band since (assuming 50/50 joint ownership) her liability would be 43,984 all of which could, potentially, be in the 18% bracket since the 28% band starts at 46,350

Good point, I hadn't really thought about that on the £40k lettings relief.


Agreed on 18%, as stated I was just doing high level assumptions.

00ec25

pjcox2005 wrote: »

Again, this is not my area so grateful if anyone can correct me on these points or tell me I'm missing something fundamental.


This is a link to residence as a first step for you to consider:


https://www.gov.uk/tax-foreign-income/residence


If it works out that's right (again definitely check!) and you decide to sell before moving back, then feel free to name your pet dog/cat/hamster after me ;-)

and don't forget that if OP's husband fails to get a job before April he could be taxed on the split year basis and have his CGT at the 18% rate as he would not be a higher rate taxpayer.

as you say, the best advice would be to pay for tax advice

pjcox2005

00ec25 wrote: »

yes, but that is not the default method.

The default is to be taxed only on the gain since 6 April 2015 - obviously that needs a (professional) robust valuation of the property at that date which will stand HMRC checking

you have to positively elect to be taxed as you have shown on the time apportioned basis over the whole ownership period.

Even then there is a 3rd method available if you elect for that instead:
the whole gain is time apportioned as you suggest, but then, using a count in exact days to time apportion the gain between pre and post 6/4/15, and only the portion of the gain since 6/4/15 is taxed.

The default "should" be the cheapest method for a property which is subject to long ownership and short PRR. Then method 3 as that avoids having to pay for a valuation should be next. Your method should (in theory) be the least tax efficient method given the property has made a gain.

That makes sense, the calculation was very much high level to reiterate this is something that the OP needs to take advice on before they return home as it is material numbers. Something that seemed to be missing in the initial responses which just skipped to PPR and the CGT calculation.


So one last time, definitely get proper advice on this OP :rotfl: