Capital gains tax

Spoken_2

Hello,
My wife bought a flat in 1994. She lived in it until 2015. I moved in to the flat in 2005. We now have a house that we live in. We bought the house in 2015.
We are now looking to sell the flat but would like to understand what is expected to pay in capital gains tax. Would the tax calculation be based on the house valuation  appreciating over the 5 years that have elapsed since moving out. We have rented the flat out over the last 5 years.

Thanks 

SMcGill

I believe that is correct. CGT calculation starts with the difference between purchase price and sale price. Where there is no purchase price (as was my experience when I was gifted a flat) then you estimate the purchase based on similar property sales at that time.

Mutton_Geoff

CGT doesn't work like that. It's your gain over the whole period less an amount for private residence relief for when you lived in it. Online gov calculator .. https://www.tax.service.gov.uk/calculate-your-capital-gains/resident/properties/

[Deleted User]

Spoken_2 said:

Hello,
My wife bought a flat in 1994. She lived in it until 2015. I moved in to the flat in 2005. We now have a house that we live in. We bought the house in 2015.
We are now looking to sell the flat but would like to understand what is expected to pay in capital gains tax. Would the tax calculation be based on the house valuation  appreciating over the 5 years that have elapsed since moving out. We have rented the flat out over the last 5 years.

Thanks 

Your wife's gain will be based on the 1994 purchase price and whatever the property sells for in 2021.  Your gain will be based on the property value in 2005 and whatever it sells for in 2021.  There is relief for the time the property was your primary residence and the final 9 months of ownership.  You also each have a CGT allowance of £12,300 this tax year.

Keep_pedalling

Lover_of_Lycra said:

Spoken_2 said:

Hello,
My wife bought a flat in 1994. She lived in it until 2015. I moved in to the flat in 2005. We now have a house that we live in. We bought the house in 2015.
We are now looking to sell the flat but would like to understand what is expected to pay in capital gains tax. Would the tax calculation be based on the house valuation  appreciating over the 5 years that have elapsed since moving out. We have rented the flat out over the last 5 years.

Thanks 

Your wife's gain will be based on the 1994 purchase price and whatever the property sells for in 2021.  Your gain will be based on the property value in 2005 and whatever it sells for in 2021.  There is relief for the time the property was your primary residence and the final 9 months of ownership.  You also each have a CGT allowance of £12,300 this tax year.

It is not clear if the OP is a joint owner of the flat but if they are then their gain will be calculated from the purchase price not the date of transfer.

https://www.gov.uk/capital-gains-tax/gifts

[Deleted User]

Keep_pedalling said:

Lover_of_Lycra said:

Spoken_2 said:

Hello,
My wife bought a flat in 1994. She lived in it until 2015. I moved in to the flat in 2005. We now have a house that we live in. We bought the house in 2015.
We are now looking to sell the flat but would like to understand what is expected to pay in capital gains tax. Would the tax calculation be based on the house valuation  appreciating over the 5 years that have elapsed since moving out. We have rented the flat out over the last 5 years.

Thanks 

Your wife's gain will be based on the 1994 purchase price and whatever the property sells for in 2021.  Your gain will be based on the property value in 2005 and whatever it sells for in 2021.  There is relief for the time the property was your primary residence and the final 9 months of ownership.  You also each have a CGT allowance of £12,300 this tax year.

It is not clear if the OP is a joint owner of the flat but if they are then their gain will be calculated from the purchase price not the date of transfer.

https://www.gov.uk/capital-gains-tax/gifts

I stand corrected about CGT gifting between spouses. I’ve assumed the OP was a joint owner since he keeps saying “we” but we know what happens when one assumes. 

AdrianC

Spoken_2 said:

Hello,
My wife bought a flat in 1994. She lived in it until 2015. I moved in to the flat in 2005. We now have a house that we live in. We bought the house in 2015.
We are now looking to sell the flat but would like to understand what is expected to pay in capital gains tax. Would the tax calculation be based on the house valuation  appreciating over the 5 years that have elapsed since moving out. We have rented the flat out over the last 5 years.

Assuming your wife still 100% owns the flat, and working in round years for the purchase and move-out dates to make it easier...
She has owned it for 31 years.
It has not been her residence for 5 years.
5 years minus 9 months post-move-out-relief is 4.25yrs.

4.25/31 = 13.7% - she is liable to CGT on 13.7% of the gain in value since she purchased the flat.

If you became a joint owner in 2005, then her 13.7% is only on her half, and your half is from the 2005 value to now. There would have been no CGT on her transfer of the half to you, because it had been her primary residence all the time.

SDLT_Geek

AdrianC said:

and your half is from the 2005 value to now. There would have been no CGT on her transfer of the half to you, because it had been her primary residence all the time.

Surely a transfer from a spouse would be "no gain / no loss" and OP would take over a proportion of the 1994 base cost (not the 2005 value).  But then SDLT is "my thing", not CGT.

dimbo61

You and your wife will have to pay the Capital Gains Tax within 30 days of the sale.
Now you don't give any figures ! 
If your talking about a " flat " in Chelsea you could have a large CGT bill but if the property is outside the London/South area it could be a much smaller CGT bill.
Figures might help.
When did you get married ? 

theartfullodger

Ensure you've got all evidence of expenses involved in buying, improving (NOT repairs) and selling costs as soon as possible. 

After sale now the CGT forms online at HMRC MUST be done within 30 days ditto I think paying any CGT.  I did this for a house I flogged in October, bought 2001, new of the short deadline but had great fun looking for buying expenses..

Mutton_Geoff

Don't think the OP will be back for another 5 years judging by their posting history. Frustrating when so many go to the trouble of trying to help.