Capital Gains on house sale

Jeremy535897

Coolhandluke said:

Looking like it's gonna be a big hit then, is there any way of reducing the amount I'd be liable for? Any way of actually finding out how much the CGT will be? Is it a percentage of the profit less any improvements that were carried out? 

I assume she wasn't a dependent relative then? If not, the capital gain will be sale proceeds, less costs of sale (legal fees, selling fees), less purchase price, less costs of acquisition (legal fees, stamp duty), less improvements, less unused annual exemption (currently £12,300) and any capital losses. The rate is 18% to the extent you have unused basic rate, and 28% thereafter. You have to report the gain and pay the tax within 30 days of completion. See
 https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

You could consider whether to transfer say half the property to your wife, before any steps are taken to market or sell the property, but it has to be done properly, and other posters here will no doubt sound a very cautious note.  

oldbikebloke

Coolhandluke said:

The 1988 deadline, is that the date the house was acquired prior to that and that my mother had to be dependent on or  before that date? 

is explained in the links given

[Deleted User]

Jeremy535897 said:

It used to be the case that a transfer of a property between spouses at a time when it was not their (or presumably by extension the dependent relative's) main residence would not benefit from the deemed acquisition date of the transferor (section 222(7)TCGA 1992), which in this case would have ruled out any possibility of dependent relative main residence relief, but this seems to have been amended by Finance Act 2020.

Coincidences! I came across this three days ago after being asked by an accountant friend to ‘fix’ a return previously prepared by a new client who had claimed against the capital gain all the relevant costs, plus mortgage payments including interest, mortgage fees and penalties before transferring the property to his wife and selling it.

Jeremy535897

[Deleted User] said:

Jeremy535897 said:

It used to be the case that a transfer of a property between spouses at a time when it was not their (or presumably by extension the dependent relative's) main residence would not benefit from the deemed acquisition date of the transferor (section 222(7)TCGA 1992), which in this case would have ruled out any possibility of dependent relative main residence relief, but this seems to have been amended by Finance Act 2020.

Coincidences! I came across this three days ago after being asked by an accountant friend to ‘fix’ a return previously prepared by a new client who had claimed against the capital gain all the relevant costs, plus mortgage payments including interest, mortgage fees and penalties before transferring the property to his wife and selling it.

It came as news to me, certainly. That computation sounds interesting. Perhaps he should also have got a quote for a five storey extension and claimed the estimate on that.

Coolhandluke

Not that straight forward. No idea how I'd remember or even find out what my mortgage payments, fees etc etc where from way back then. 

Jeremy535897

Coolhandluke said:

Not that straight forward. No idea how I'd remember or even find out what my mortgage payments, fees etc etc where from way back then. 

Purdeyoaten2 was referring to a case where someone got the whole computation utterly wrong. Read my earlier post. You can't deduct mortgage payments (capital or interest), mortgage fees or penalties, just as you can't deduct estimated costs of absurd mythical extensions. You can only claim what you spent on the capital asset, so the original cost plus fees, plus improvements (which have to be reflected in the value of the house when sold), plus selling expenses.

[Deleted User]

Coolhandluke said:

Not that straight forward. No idea how I'd remember or even find out what my mortgage payments, fees etc etc where from way back then. 

Sorry - my aside only confused you and you are probably concerned enough as it is.

However, over 33 years, were there not any significant improvements?

Coolhandluke

[Deleted User] said:

Coolhandluke said:

Not that straight forward. No idea how I'd remember or even find out what my mortgage payments, fees etc etc where from way back then. 

Sorry - my aside only confused you and you are probably concerned enough as it is.

However, over 33 years, were there not any significant improvements?

The only ones I can think of would be new kitchen, bathroom, double glazing and new heating system but as to costs I can't remember and have no receipts etc 

Jeremy535897

Unfortunately it is very debatable as to whether any of these count as improvements for this purpose. Normally you are looking at something like a conservatory, or an extension. I welcome any other posters' comments.

[Deleted User]

Jeremy535897 said:

Unfortunately it is very debatable as to whether any of these count as improvements for this purpose. Normally you are looking at something like a conservatory, or an extension. I welcome any other posters' comments.

The guidance on this is simply awful and always has been. For example, I would always claim the cost of an entirely new kitchen as this would clearly add value but would disregard the simple replacement of units. But, if the kitchen was replaced twenty years ago it now needs replaced again and, accordingly, has it added value? The heating system is a possibility if there was none in place originally (possible 33 years ago?) Even more contentious could be a new bathroom e.g. total upgrade from old cast iron bath to modern alternative - but starting to struggle now! 

Time jimmo contributed I think 🤔