CGT on sold property

CEON44

I know there are loads of questions about this but hard to find an answer that meets my own personal circumstances. So heres my situation. Bought a small property for cash in 2014, renting it out to a family who were sitting tenants. I now have sold the property to another investor and the family will stay on. During the 6 years I owned the property I completed Self asessments every year and paid tax based on the income received from it. So now its sold I want to now if its possible for me to work out the CGT I will owe. I bought the house for £58000 and sold for £80000.  So £22000 profit. But what expenses am I allowed to deduct from this? Can I deduct costs from both buying the property back in 2014 and from selling the property now in 2020? And what counts as expenses/costs, estate agent fees, solicitor etc. Also can I "share" the CGT with my wife to reduce tax? The property was in my name only. I live in my own home mortgage free
Want to try and sort this out myself rather than going to accountant if possible

spider42

Yes, you may deduct both the buying and selling costs, such as estate agents and solicitors. Also SDLT (although that is unlikely to apply here, given the cost of the property). If you've made any improvements to the property (rather than just normal maintenance), such as adding an extension or conservatory, then you can also claim these. 

Are you aware of the new reporting rules from from 6 April 2020 for the sale of residential properties? You now have to report the gain to HMRC, and pay an estimate of the CGT liability, within 30 days of completion.

You could have transferred half to your wife, but you would have needed to have done this before the sale took place. Unfortunately, it is now too late. This could potentially have saved you around £1,700 in CGT, and also avoided the need to make a return to HMRC, so you may have been better seeing an accountant first (although I'm biased, as I'm an accountant!).

Jeremy535897

You can deduct the following from the sale proceeds:

• costs of sale (estate agent, legal fees)
• original cost
• costs of acquisition (legal fees, stamp duty but stamp duty would be nil)
• improvements, but not repairs. Repairs are deducted from rental income
• capital losses on any other assets sold at a loss in the same tax year
• annual exemption, which for sales (date of exchange) after 5 April 2020 is £12,300 (assuming no other gains in the tax year)
• capital losses from earlier years

For sales completed after 5 April 2020, you must return the capital gain within 30 days of completion and pay any tax due. See
https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

It is too late to share the capital gain with your spouse. You would have had to transfer part of the property to her before any sale (the longer the time frame, the better).

CEON44

Ok thanks for the replies. So it looks like I screwed up by not transferring part to my wife. With regards improvements I retiled bathroom walls and floor and fitted new shower cubilcle and toilet. Cost about £1400  Does this count as improvement? I also fully concreted the back yard. This is a terrace house with smallish back yard. Tenants have an autistic child and the grass didnt suit so I agreed to concrete entire yard. Cost about £1000. Improvement?  

oldbikebloke

neither are improvements 

you probably won't want to accept this, but to be an "improvement" you have to provide something which was not there before:

- you had a bathroom, you still have a bathroom with toilet and/or shower/bath (it matters not which), it simply has different décor.

- you had a back yard of area X sq metres, it still has a back yard of X sq metres. What it is surfaced with is irrelevant.

Keep_pedalling

CEON44 said:

Ok thanks for the replies. So it looks like I screwed up by not transferring part to my wife. With regards improvements I retiled bathroom walls and floor and fitted new shower cubilcle and toilet. Cost about £1400  Does this count as improvement? I also fully concreted the back yard. This is a terrace house with smallish back yard. Tenants have an autistic child and the grass didnt suit so I agreed to concrete entire yard. Cost about £1000. Improvement?  

No you can’t claim those costs, as you presumably already claimed  those expenses against rental income.

CEON44

oldbikebloke said:

neither are improvements 

you probably won't want to accept this, but to be an "improvement" you have to provide something which was not there before:

- you had a bathroom, you still have a bathroom with toilet and/or shower/bath (it matters not which), it simply has different décor.

- you had a back yard of area X sq metres, it still has a back yard of X sq metres. What it is surfaced with is irrelevant.

No problem, clutching at straws I know but I had to ask

CEON44

Keep_pedalling said:

CEON44 said:

Ok thanks for the replies. So it looks like I screwed up by not transferring part to my wife. With regards improvements I retiled bathroom walls and floor and fitted new shower cubilcle and toilet. Cost about £1400  Does this count as improvement? I also fully concreted the back yard. This is a terrace house with smallish back yard. Tenants have an autistic child and the grass didnt suit so I agreed to concrete entire yard. Cost about £1000. Improvement?  

No you can’t claim those costs, as you presumably already claimed  those expenses against rental income.

Yes, to be fair I had already reported these expenses 

oldbikebloke

CEON44 said:

Keep_pedalling said:

CEON44 said:

Ok thanks for the replies. So it looks like I screwed up by not transferring part to my wife. With regards improvements I retiled bathroom walls and floor and fitted new shower cubilcle and toilet. Cost about £1400  Does this count as improvement? I also fully concreted the back yard. This is a terrace house with smallish back yard. Tenants have an autistic child and the grass didnt suit so I agreed to concrete entire yard. Cost about £1000. Improvement?  

No you can’t claim those costs, as you presumably already claimed  those expenses against rental income.

Yes, to be fair I had already reported these expenses 

then thank god you asked as we have prevented you from committing tax fraud by double counting