We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

CGT on previous main home

Options
Hi,

My husband owns our previous home in his sole name which he purchased before we met, so it’s never been in my name.

We bought another home together which is our main residence. I’m trying to work out his CGT liability if we sell our previous home which has been let out but the tenants have now given notice.

It was his main residence for 107/192 months but I understand he can claim an additional 18 months making it 125/192 months.

It has been let for the remaining 85 months (or 67 months after taking the 18 months for PRR)

Purchase price £50,000 August 2003
Current Value £100,000
Gain of £50,000
- £3,500 fees
£46,500 profit

PRR 46,500 x 125/192 = 30,273
LR 67/192 = 0.34
0.34 x 30,273 = £10,292

30,273
- 10,292
= 19,981
- 12,000 CGT allowance
= 7,981 taxable gain at either 18% or 28% depending on income.

Is this calculation correct? Or have I gone totally wrong?

Any help would be great!
Thanks

Comments

  • Keep_pedalling
    Keep_pedalling Posts: 20,740 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    Looks like your final bit of the calculation has gone badly off track

    It should be Profit-PPR-LR not PPR-LR

    If you run the figures though HMRCs calculator you should find there is no CGT to pay.

    https://www.gov.uk/tax-sell-property/work-out-your-gain
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    1,000 Posts Combo Breaker
    edited 13 August 2019 at 7:12AM
    Mrs_WW wrote: »
    Hi,

    My husband owns our previous home in his sole name which he purchased before we met, so it’s never been in my name.

    We bought another home together which is our main residence. I’m trying to work out his CGT liability if [STRIKE]we[/STRIKE] he sells[STRIKE] our[/STRIKE] his previous home which has been let out but the tenants have now given notice.

    It was his main residence for 107/192 months but I understand he can claim an additional 18 months making it 125/192 months.

    It has been let for the remaining 85 months (or 67 months after taking the 18 months for PRR)

    Purchase price £50,000 August 2003
    Current Value £100,000
    Gain of £50,000
    - £3,500 fees
    £46,500 profit

    PRR 46,500 x 125/192 = 30,273
    LR 67/192 = 0.34
    0.34 x 30,273 = £10,292

    30,273
    - 10,292
    = 19,981
    - 12,000 CGT allowance
    = 7,981 taxable gain at either 18% or 28% depending on income.

    Is this calculation correct? Or have I gone totally wrong?

    Any help would be great!
    Thanks
    LR is wrong

    PRR 46,500 x 125/192 = 30,273
    LR £46,500 x 67/192 = 16,227

    taxable gain 46500-30273-16227 = £0
    he has no gain on which he can be taxed

    see here for fuller details of the calculation:
    https://forums.moneysavingexpert.com/showpost.php?p=73621764&postcount=2
  • Mrs_WW
    Mrs_WW Posts: 8 Forumite
    Thanks so much for this. I really appreciate it. I lived there from March 2007-July 2012 when we both moved out and the property was then rented. We got married in October 2012. Would this make a difference?
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    1,000 Posts Combo Breaker
    edited 13 August 2019 at 7:13AM
    Mrs_WW wrote: »
    Thanks so much for this. I really appreciate it. I lived there from March 2007-July 2012 when we both moved out and the property was then rented. We got married in October 2012. Would this make a difference?
    no change,

    but I did misread your post about you living there yourself. He continued to live there as his main residence until he moved out. Your existence until that point in time is irrelevant.

    You were not an owner whilst living there, and that specific circumstance cannot ever be altered after the event, even if then married. Therefore there is no point in making you a retrospective owner, since that would remove some of his PRR, and result in the calculation being messed up

    leave as is - he has no tax to pay
  • Mrs_WW
    Mrs_WW Posts: 8 Forumite
    That’s great news! Thanks for your help!
  • Sibbers123
    Sibbers123 Posts: 324 Forumite
    Fourth Anniversary 100 Posts
    Note that lettings relief is being abolished in April 2020...
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.8K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.8K Work, Benefits & Business
  • 598.7K Mortgages, Homes & Bills
  • 176.8K Life & Family
  • 257.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only 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.