CGT question

aaaaancly

Hi,

I bought my first flat in 1997. £51k

Lived there for 4 years then my circumstances changed and I have let it until a year ago when I lost my tenant so I have been refurbishing it for sale or further letting.

I haven't decided which yet.

If I sell, what are the tax implications? I have looked at on line calculators but they are not straightforward. 

I have some accrued negative capital gains (or losses) of £45k to offset my liability.

I'm out of my depth here. I haven't really planned what has happened, so have never really considered the hole that I may have been digging myself!

I'm talking to my accountant about it soon but the more options and views the better so that I can make the best decision.

I think moving back there may be an option. If I did that. Would the empty year (I have been paying the council tax but claiming a single person discount elsewhere in the borough)count in any way?

Thanks for any opinions.

Jeremy535897

I suggest you read https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2021

Keep_pedalling

What is the flat worth now?

aaaaancly

Sorry...I didn't provide that important info.

Estate agent estimated £265 yesterday.

[Deleted User]

aaaaancly said:

Sorry...I didn't provide that important info.

Estate agent estimated £265 yesterday.

£265 ??  I think you should change your estate agent!! 

[Deleted User]

Let’s say that you sell it today and that you bought it in April 1997. You have owned it for 264 months and have lived in it for 48. You can also add 9 months to that as you lived in it at some point making that figure 57.

Your gain is 214000. This is reduced by 57/264 which is 46204 leaving 167796. You have losses brought forward of 45000 to make the chargeable gain 122796. Taking off the annual exemption makes that 110496.

The maximum tax payable would be 110496 @ 28% = £30938. I don’t know any details of your other income and it is possible that up to 37700 of that could be at 18%. 

The gain must be reported and tax paid within 30 days of completion.

If you moved back in the ‘empty year’ would make no difference. It was not your main residence as a matter of fact and no claim can be made for that time.

aaaaancly

[Deleted User] said:

aaaaancly said:

Sorry...I didn't provide that important info.

Estate agent estimated £265 yesterday.

£265 ??  I think you should change your estate agent!! 

See how easily confused I am!

£265,000

aaaaancly

[Deleted User] said:

Let’s say that you sell it today and that you bought it in April 1997. You have owned it for 264 months and have lived in it for 48. You can also add 9 months to that as you lived in it at some point making that figure 57.

Your gain is 214000. This is reduced by 57/264 which is 46204 leaving 167796. You have losses brought forward of 45000 to make the chargeable gain 122796. Taking off the annual exemption makes that 110496.

The maximum tax payable would be 110496 @ 28% = £30938. I don’t know any details of your other income and it is possible that up to 37700 of that could be at 18%. 

The gain must be reported and tax paid within 30 days of completion.

If you moved back in the ‘empty year’ would make no difference. It was not your main residence as a matter of fact and no claim can be made for that time.

Thank you.

I tried the .gov calculator and it came out at £32500 owed, but I was guesstimating some values.

The £45000 losses include my annual allowance...it was £41000 and I have used £8000 of my allowance this year (unsure whether this year is now last year because I got that figure a few days ago)..so I made it £45000 total.

My total income was £28000 last year.

[Deleted User]

You cannot use your annual allowance to enhance a loss. If the loss was 41000 it remains that and you will need to amend my figures(the bill will increase by £1120). Your capital gains allowance is lost if not used. 

PS - you can deduct fees associated with the buying and purchase of the property.

[Deleted User]

Having received-read your post, you may have made an error. Did you make 8000 gains and 41000 losses in 2020/21? If so, you have only 33000 loss to carry forward, not 41000. 

aaaaancly

[Deleted User] said:

Having received-read your post, you may have made an error. Did you make 8000 gains and 41000 losses in 2020/21? If so, you have only 33000 loss to carry forward, not 41000. 

I have £41000 CGT losses from stocks and shares which I believe I can use any time (doesn't have to be the same year) to offset  gains.

I also have used £8000 of my £12000 allowance this year. Leaving £4000....but I think that was 20/21. If I sell this year I will have £12000 allowance yes?

sorry for the confusion and misinformation. I haven't thought about CGT until I wondered whether I should sell this flat or not, plus I'm not very clued up nor do I have a good business mind. 

This forum is great for getting an idea of my options. Thanks for all the replies.