CGT on flat owned for 18 years

Rogue1971

HI I bought a flat for 70k in 2001. Ive lived in it and rented it out several times over the years. Ive been told that because i transferred half to my husband in january 2018 I dont have any tax to pay now that we are selling for 300k. Is anyone here able to advise me? it seems extreme to me to not owe anything.

Pennywise

Nowhere near enough information to say one way nor another.

It will depend on the actual time you occupied it as your home and the time it was let out, plus the reasons for any periods when it was neither, and who was living in it for the last 18 months prior to sale.

It will also depend on when you sell it as one of the reliefs you'll be eligible for (lettings relief) is about to be scrapped.

It will also depend on when you married your husband, and what periods he lived in the house as his main home (both before and after marriage).

Transferring half to you husband may turn out to be a master-stroke of tax planning or a complete disaster.

Quite possible you owe nothing, but also quite possible that you and/or your husband may owe some tax, maybe a substantial amount.

The details/facts will decide!

Rogue1971

thank you for responding.

2001-2003 lived in alone
2003-2008 rented out
2008-2013 lived in alone
2013 to date- rented out.

We live in a house in my husbands sole name. Half of my flat was transferred to him when valued at 260k a year ago.

Pennywise

Rogue1971 wrote: »

thank you for responding.

2001-2003 lived in alone
2003-2008 rented out
2008-2013 lived in alone
2013 to date- rented out.

We live in a house in my husbands sole name. Half of my flat was transferred to him when valued at 260k a year ago.

So he never lived it in as his home? If that's the case, sounds like a very bad mistake to put it in joint names as he won't get any main residence relief nor lettings relief. Ouch, that's going to cost you!

All figures very rough and ready for illustration only!

For your half, you've roughly 6-8 years of living in it (should be calculated accurately, not yearly). So 6-8 years out of 18 are covered by main residence relief, plus last 18 months maybe, so maybe a total of 10 out of 18 years exempt. Your sale share is £150k less cost share £35k, so your gain is £115k, of which 10/18 is covered by main residence relief, say £65k leaving £50k, less lettings relief, say £30k, leaving £20k less your annual CGT exemption say £12k, leaving £8k taxable at 28% (assuming you're a higher rate taxpayer), so tax on your share maybe just a couple of thousand.

Your husband's share is a disaster. His gain is the same £115k, i.e. half sale price but he acquires your cost price, i.e. half the £35k. He never lived in it as his home, so doesn't qualify for main residence relief nor lettings relief. So his taxable gain is £115k, less his annual cgt exemption £12k, gives taxable gain of £103k, assuming he's a higher rate taxpayer, at 28%, that's capital gains tax of £29k on his share.

Why did you transfer half share to him? Did you not take professional advice at the time as to the tax consequences?

Rogue1971

sorry, he lived in it 2008-2013 ! i mistyped. We married in 2007.

Rogue1971

Ive just spoken to a tax adviser who states that the AEA and LR eliminate the gains altogether and there's nothing payable.

00ec25

Rogue1971 wrote: »

Ive just spoken to a tax adviser who states that the AEA and LR eliminate the gains altogether and there's nothing payable.

that would be my gut reaction now you have clarified the date of marriage and that he lived there


put your own figures thorough this example is you want confirmation of the advice you have been given

https://forums.moneysavingexpert.com/showpost.php?p=73621764&postcount=2