Capital Gains Tax on previous family home

[Deleted User]

Jeremy535897 said:

soulsaver said:

@Jeremy535897 Can't they both use their individual CGT allowance - so 2 x £12300 (assuming no other chargeable gains)?

That's what I have done if you look at my figures above.

I note that the value of the property at 1997 was actually 35000 and one would presume that it was at least this amount in 2004, when the op moved in. Given that, I would say that the op would have no chargeable gain. Do you agree?

Jeremy535897

[Deleted User] said:

Jeremy535897 said:

soulsaver said:

@Jeremy535897 Can't they both use their individual CGT allowance - so 2 x £12300 (assuming no other chargeable gains)?

That's what I have done if you look at my figures above.

I note that the value of the property at 1997 was actually 35000 and one would presume that it was at least this amount in 2004, when the op moved in. Given that, I would say that the op would have no chargeable gain. Do you agree?

I assumed £40,000, but OP only gets half of that.

jarweb

Jeremy535897
I'll have a proper read of your reply and digest it a bit more.  Does letting relief not come into this as well ?  Example 9 from the link below is a good fit for our situation, apart from the different ownership periods.
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2020#letting-relief
It suggests PRR and Letting relief would both be available.  But I did notice that it specifies the last 18 months as exempt so don't know if some info on this page is outdated even though it says it was updated August 2020.
Thanks
 

p00hsticks

jarweb said:

Jeremy535897
I'll have a proper read of your reply and digest it a bit more.  Does letting relief not come into this as well ?  Example 9 from the link below is a good fit for our situation, apart from the different ownership periods.
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2020#letting-relief
It suggests PRR and Letting relief would both be available.  But I did notice that it specifies the last 18 months as exempt so don't know if some info on this page is outdated even though it says it was updated August 2020.
Thanks
 

As far as I'm aware lettings relief was effectively abolished last April (apart from if you had a lodger, which doesn;t apply here).  

https://www.taxassist.co.uk/resources/articles/changes-to-landlord-capital-gains-tax-rules

Jeremy535897

jarweb said:

Jeremy535897
I'll have a proper read of your reply and digest it a bit more.  Does letting relief not come into this as well ?  Example 9 from the link below is a good fit for our situation, apart from the different ownership periods.
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2020#letting-relief
It suggests PRR and Letting relief would both be available.  But I did notice that it specifies the last 18 months as exempt so don't know if some info on this page is outdated even though it says it was updated August 2020.
Thanks
 

Unfortunately that letting relief ceased with effect from 6 April 2020, as noted above. The 18 months was also reduced and is now 9 months.

[Deleted User]

Jeremy535897 said:

[Deleted User] said:

Jeremy535897 said:

soulsaver said:

@Jeremy535897 Can't they both use their individual CGT allowance - so 2 x £12300 (assuming no other chargeable gains)?

That's what I have done if you look at my figures above.

I note that the value of the property at 1997 was actually 35000 and one would presume that it was at least this amount in 2004, when the op moved in. Given that, I would say that the op would have no chargeable gain. Do you agree?

I assumed £40,000, but OP only gets half of that.

You did indeed! 👍

jarweb

Thanks folks. 
Doesn't help my confusion when the info on the HMRC web site isn't consistent and I'm using examples with outdated info.  But, yes, I now see the example I mentioned from the web link stated the house was sold in 2019, before the relief rules changed.  

In summary, we calculate my partner's share to start in 1997 with the house value (halved) at that time - e.g. £10,000
And we calculate my share starting in 2004 with the value at that time (halved) - e.g.  £20,000
Jeremy535897  we need to see if we can find a specific valuation for the house from 2004.

Hopefully a final question.
We've had to do self assessment these last few years due to letting the property making a very small profit.
I know (or think) the self assessment is separate from Capital Gains or has this changed as well ?     If the house sale goes through before the end of this financial year, is it likely to affect the amount of tax we're paying ?  Assuming nothing else changes in the budget.
We were getting letting income until the last tenant left in November so will need to declare this.   
Thanks 

Jeremy535897

You have to report capital gains on residential property, and pay the tax, within 30 days of completion (if tax is due). See
https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

You then report the gain , and the tax paid, in the capital gains section of your self assessment tax return. Whether it is better to sell in 2020/21 or 2021/22 will depend on the Budget (although changes could take place from 3 March 2001).

jarweb

Yes - understand that we need to report within 30 days and it needs to go in with self assessment.  Plus things could change in the budget.

But was just wondering if anyone could advise if the CGT is treated separately from the main self assessment.  We would have had some income from letting up until November so will have to declare this.  Is this added to the CGT gain to mean we could end up paying more tax for this year ?  I know we will be paying more tax anyway but I mean could the combination put us over some threshold which we wouldn't have if the CGT was submitted next year.

But if the house sale completes after 5th April we would have had no additional income for next financial year apart from the CGT.
Thanks

Jeremy535897

The rate of capital gains tax depends on your income, not the other way round:
https://www.gov.uk/capital-gains-tax/rates
Unless your taxable income, including net rental income, plus the taxable part of the gain will exceed £50,000 (in England and Wales) in 2020/21, the rate on the gain will be 18%. These figures apply to each of you. If you wait until next year, when your income is lower, that might be better, but the Budget might change the rules on capital gains in a way that makes you worse off. I doubt you are likely to exchange contracts on the property before 3 March 2021, so you may as well see what the Budget brings. Don't let the tax tail wag the dog, though.