Capital Gains Tax on previous family home

jarweb

My partner bought her long time family home around 1997 from the local council for about £30,000 and continued to live there for a further 10 years. I moved in for roughly the last 2 or 3 years of that.

We then decided to let the property when we moved out.  We took out a buy to let mortgage for £60,000 to offset part of the mortgage on our new home.
We now plan on selling the previous property and the asking price will be around £90,000

My question is.  When it comes to Capital Gains Tax, will the gain be £60,000 (90-30) or £30,000 (90-60).    This is obviously going to make a big difference to the amount of tax we will need to pay.
I'm hoping it's the £30,000 as £60K was effectively the value of the property when we moved out - and it was our primary residence at the time.

Any advice welcome.
Thanks

Aceace

You get private residence relief for the time you lived in it plus an extra 9 months (I.e. 0.75 years).
So, you owned it for ~24 years and would receive private residence relief for 10.75 of those years. 
You would pay CGT on (24 - 10.75)/24 * gain = 0.552 * £60k = £33,125 minus your CGT allowance. 
See government website here: https://www.gov.uk/tax-sell-home/let-out-part-of-home for a worked example.

jarweb

Thanks for the reply.
I've looked at various examples previously but I'm still not sure if the bottom line gain (minus the residence relief) should be the £60K or the £30K.    Does the fact we re-mortgaged not come into it ?  This is the part that's causing me confusion.

If we'd just sold the house at the time for £60K we wouldn't have CGT as it was our main home.  Or is it just a case of "well, you didn't sell so it doesn't count"  ?

There's also the fact that I didn't live in the property all this time but my partner did.
Sorry if these are pretty basic questions but it's not something we've ever had to work out.
Thanks
 
 

soulsaver

You maybe better in the 'tax' forum with this question, but my two pence:
The fact that you re-mortgaged doesn't come into the gain calculation. 

Aceace

Yes, a capital gain (or loss) is only realised when you actually sell something. The fact that you remortgaged is irrelevant.

jarweb

OK - thanks.  Didn't see a specific Tax forum - just a "cutting tax" one but will try that.

soulsaver

jarweb said:

OK - thanks.  Didn't see a specific Tax forum - just a "cutting tax" one but will try that.

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