Sale of second house

paul123

:eek: Hi
We are considering selling our second house which we have owned for the last 5 years. On a profit if approximately £60000 does anyone know how much capital gains tax this will work out to be or is there anyway of mitigating this tax all together? Thanks

silvercar

If you live in it as your PPR, you will reduce your CGT bill considerably.

Otherwise, profit =60k less say 5k buying and selling costs = 55k. Taper relief for 5 years ownership is 15% so gain = 46.75k. CGT allowance is 9.2k each reducing gain to 46.75-(2x 9.2)=28.35k ie 14,175 to be taxed at your marginal rates. If you are both 40% tax payers this would be £11,340. Include in your tax returns for 2007/08 and pay tax by Jan 2009.

The other option is to delay exchange until after 6/4/08. Then the CGT rate is expected to reduce to 18%. Taper relief will be abolished and the CGT allowance increases to 9.4k. So your gain of 55k after costs, would be 36.2k using your allowances and the CGT bill at 18% would be £6,516.

paul123

Thankyou silvercar for such a detailed response. Much appreciated.

IveSeenTheLight

You should consider moving into this property and make as your home.
If you were to decide a few months later that this was not the place for you, you could then decide to sell.
There is no CGT on selling your residentual home

Holland_2

I have been struggling to find any real figures and percentages for working out the capital gains calculation. Your advice has helped. My situation is that I bought my flat in 2006 and am due to marry next year 2008 and do not live in my flat anymore. I wondered if it was worth selling before getting married to avoid capital gains. I have made very little on the flat perhaps - £6K. I really do not want to sell at the moment but fear I will be stung in the future. I cannot believe that we are charged this silly tax as I worked hard to buy my first property and feel punished for getting married! If anyone can help that would be great!

silvercar

As you have lived in the property as your home, you will be exempt from CGT for the time it was your home and the last 3 years of ownership.

Added to that you have a CGT allowance (currently £9,200).

You can also deduct costs before calculating the gain, so I don't think you have anything to worry about.