Capital Gains new rules April 2020

regional

Good morning, I am hoping someone can help me understand the new rules affecting second property owners in April 2020.
We rented our main residence of 24 years in 2015 and this continues to date.
I have visited various capital gain calculation sites and to date ,should we decide to sell we would not attract any capital gain charges, however having read an article in the paper the calculations are about to change and not for the better ?
I am retired and my husband is a 20% taxpayer, property value in 2015 was 220k, now probably 300k.
Really hoping someone can help me.

Many thanks in anticipation

Slithery

How much did you pay initially?

regional

Hi, originally paid £60k for house 24 years ago

Crashy_Time

regional wrote: »

Good morning, I am hoping someone can help me understand the new rules affecting second property owners in April 2020.
We rented our main residence of 24 years in 2015 and this continues to date.
I have visited various capital gain calculation sites and to date ,should we decide to sell we would not attract any capital gain charges, however having read an article in the paper the calculations are about to change and not for the better ?
I am retired and my husband is a 20% taxpayer, property value in 2015 was 220k, now probably 300k.
Really hoping someone can help me.

Many thanks in anticipation

Unlikely with the Brexit turmoil IMO.

ProDave

You take the purchase value and sale value less expenses at each end and work out the total gain.

hmrc assume that gain is linear throughout the period of ownership.

Under the new rules the portion of time you lived in it, and the last 9 months is exempt from capital gains tax. The period is was used for any other purpose is taxable.

so some VERY rough sums. You owned it for 29 years (or will have by the time you sell it) and you sell it for 300K you made a TOTAL profit of 240K. That is a profit of £689 per month.

You moved out in 2015 and sell in 2019 so that's 4 years, less 9 months that you did not live in it, so 39 months where it's gain will be taxable. So a taxable gain of £26871

The property was (assumed) joint owned, so each owner will have a taxable gain of £13453

The current capital gain allowance is £12000 so you will each have to pay capital gains on the amount over that, or £1453. the rate is 18% so expect a capital gain bill each of £261

That is VERY approximate with a lot of assumptions.

Slithery

Crashy_Time wrote: »

Unlikely with the Brexit turmoil IMO.

And how is that in any way relevant to the CGT formula?

Crashy_Time

Slithery wrote: »

And how is that in any way relevant to the CGT formula?

There will be less CGT to pay.

00ec25

as ProDave shows, complete the sale in/after April 2020 and you cannot claim any letting relief. Therefore the only reduction you get against the gross gain remains the private residence relief (subject to 9, not 18, final months under the 2020 rule)

letting relief for a jointly owned property is currently worth up to £80,000 reduction in the size of the gross gain. That reduces to £0 in 2020

The mechanics of the 2020 calculation are as shown.
The tax payable will be trivial for sometime yet with joint ownership and a relatively small gain split between two people.

the value in 2015 is totally irrelevant

00ec25

Crashy_Time wrote: »

There will be less CGT to pay.

once more your grasp of economics and devastatingly valuable contributions to this board are plain for all to see

regional

Really appreciate you taking the time out Prodave to outline the changes for me and your assumptions are indeed correct the property is jointly owned.
Thank you

regional

Thank you so much 00ec25.
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