CGT come April..

Pancakesss

Hi,
Wondering if anyone is kind enough to share their knowledge on how to calculate CGT on a BTL property? I am seriously thinking about selling in the next few weeks. I’m really kicking myself as I will now have to pay the new CGT tax rules come April because i didnt research sooner.

I bought my first house in 2015 for £167k. Bought a house together with now husband in March 2018. Remortgaged my first property as BTL and renting out from April 2018. We paid the extra 3% stamp duty (£11k) when we bought our ‘2nd home’ which is actually our main residence. I am now looking to sell now as if i sell the BTL property within 3 years we can claim that £11k back. 

The BTL property has been valued at £205k (£38k) increase. I lived in the property for 31 months. If i sell this house by August (60 months of owning property), how much CGT am i looking to pay? Costs involved in buying property : £1.1k sol fees, £840 stamp duty, £295 survey. 

Likely costs selling: £1.4k sol fee, £1.4k estate agent fee, £400 estate management ‘sales pack’.
the property is in my sole name.

thanks so much in advance as this is giving me such a headache to work out as i don’t understand the system!

oldbikebloke

Did you marry before or after the (joint) purchase of the marital home in 2018?
that may alter the date at which your (sole name) property ceased to be your main home since a married couple has only one main home, the one they live in.

38k increase on a property,  where you already have a claim to PRR, and less your CGt allowance, means the amount of tax you will pay is so little I can't be bothered to work it out for you.

read this and post your own calculation so we can tell you if you are correct...
https://forums.moneysavingexpert.com/discussion/comment/76874139#Comment_76874139

Pancakesss

Thanks so much oldbikebloke! We just got married this year. I looked at the really helpful link you sent and made these calculations.. (40 months is me living there for 31months + 9 months)

Gross gain after costs = £33k

PRR = 33 x (40/60) = £22k

Net gain 33,000 - PRR (22,000) = 11,000

Net taxable gain 11,000 - personal allowance 12,000 = -1,000

Is this correct? Does this mean i wont have to pay any CGT?

Thanks

oldbikebloke

Pancakesss said:

Thanks so much oldbikebloke! We just got married this year. I looked at the really helpful link you sent and made these calculations.. (40 months is me living there for 31months + 9 months)

Gross gain after costs = £33k

PRR = 33 x (40/60) = £22k

Net gain 33,000 - PRR (22,000) = 11,000

Net taxable gain 11,000 - personal allowance 12,000 = -1,000

Is this correct? Does this mean i wont have to pay any CGT?

Thanks

correct, no CGT to pay - although obviously a bit tight as largely a result of the size of the cost deductions to arrive at the gross gain

do also pay attention to the rule (gross sales proceeds > x4 the allowance) regarding still having to declare the sale on the 20/21 tax return even with no tax to pay - assuming of course you are notified that you have to do one (letters normally sent out each May)

Pancakesss

Thanks so much Oldbikebloke! Have now got property listed. Spoke to the solicitor I used for buying the house and also my 2nd lot of transactions buying 2nd home with my then (unmarried) partner.
He told me today that hes 100% not sure if i can claim back the Surcharge Stamp Duty I had paid,  if it had been rented out (BTL property?!) This is despite it being only been 2 years since and i’m sure he told me i could back then? Any further advice greatly appreciated!
many thanks

theartfullodger

See what Rishi says tomorrow

oldbikebloke

Pancakesss said:

Thanks so much Oldbikebloke! Have now got property listed. Spoke to the solicitor I used for buying the house and also my 2nd lot of transactions buying 2nd home with my then (unmarried) partner.
He told me today that hes 100% not sure if i can claim back the Surcharge Stamp Duty I had paid,  if it had been rented out (BTL property?!) This is despite it being only been 2 years since and i’m sure he told me i could back then? Any further advice greatly appreciated!
many thanks

change solicitor to someone who is competent and can be bothered to read the rules as the criteria for reclaiming are simple: 
1. within 3 years 
2. the property being sold MUST have been your main home within the last 3 years 
3.  condition D MUST apply 
read the "after" rule 
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800