Help with CGT calculation

Black_Cat2

Hi all, thanks in advance for any help with this.

I'm trying to understand CGT on a second property which was our main residence before renting it out. 

Hubby owned the property before I moved in so it's not an outright 50/50 split. I've got a little confused with how we go about doing the calculation for CGT purposes.  Do we need to split out the months he owned it before I lived there and he pays 100% tax on that particular part? Then 50/50 for the rest of the gain? Not sure if it's as 'simple' as that?  

An example (for calculation purposes):

Hubby owned for 100 months (before I moved in), then we lived there jointly for a further 200 months, then rented out for 50 months.  Property sells for £200,000, was purchased for £50,000. 

What figure along with the calculation will his gain be? 

Thanks 🐈

Jeremy535897

Is the property owned jointly, and if so, from when?

Were you married throughout the period the property was owned by you/your husband?

Was it your husband's main residence before you moved in?

Black_Cat2

We weren't married when I moved in but I was added to the mortgage and yes it was his main/only residence before I moved in.

Jeremy535897

Up until you moved in, the gain is exempt, as it was your husband's main residence. As you were not married at the time, if you acquired 50% of the property (and your reference to being put on the mortgage suggests this has happened), the value of a half interest at that time is your base cost.

His gain, on this assumption, would be calculated as follows:

Half the sale proceeds less selling costs, less half his original cost plus acquisition costs, giving the gross gain (assuming no improvements), of which 309/350 is exempt (100 months main residence alone, 200 months with you, last 9 months as well).

Your gain would be half the sale proceeds less selling costs, less the market value of a half interest in the property at the date it was transferred to you, giving the gross gain, of which 209/250  is exempt, assuming it was your main residence from the date of transfer, and that date was 250 months ago.

Black_Cat2

Ty.  Maths not my strong suit 🙄. Am I right in thinking for hubby's CGT only:

£200,000 ÷ 2 = £100,000 (his share of sale proceeds) 
Less selling costs (say £1000) = £99,000
Less buying costs (say £1000) = £98,000

£98,000 x 309/350 = £86,520 exempt

£98,000 - £86,520 = £11,480 which is the chargeable gain and subject to CGT?

If that's right then in this example there would be no CGT to pay (allowance £12,300) but it still needs to be declared to the Revenue? 

Jeremy535897

You can also deduct half the purchase price, ie £25,000, so the gross gain falls to £73,000.

Even if the property was worth no more than £50,000 when half was transferred to you, your chargeable gain is £73,000 x 41/250 = £11,972. If you both have no other gains in 2021/22, there is no tax, and therefore no need to report under the new rules within 30 days of completion.

You will each however have to report the capital gain under self assessment, as your share of the proceeds will exceed £49,200.

Black_Cat2

Is that the supplementary page SA108 re. self assessment? 

Jeremy535897

Yes. (I have assumed you own half each, rather than some other split.)

Black_Cat2

Yes ty we are 50/50.  Just looking at the form, it's pretty daunting lol 😳