capital gains tax

Dr_Spock123

My name was on a joint mortgage that was sold 6 weeks ago, however i never lived there for last 4years as i split from my partner, I paid no contributions towards the property for the last 4 years 3 months neither but kept my name on mortgage to help her out as it was a 5 year fixed rate .However when house was sold i received 30K as 50% of net equity proceeds. I've been having to rent for the last 4 years . will i have to pay for CGT on the 30K.

Jeremy535897

You don't give enough information to answer. To work out your capital gain, you need to know the cost, plus buying costs, the sale price, and selling costs, and the date of acquisition, the date you left the property as your main residence, and the date of sale. If there were any improvements to the property that increased its sale value, you need details of those too.

You presumably retained your 50% ownership throughout. The amount of the mortgage is irrelevant. If any tax is due, you have to report the gain and pay the tax within 30 days of the sale completing. See:

https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

Dr_Spock123

thanks for reply i will make this calculations and pay accordingly. So buying fees and selling are deducted from what i have to pay tax man. Does that include solicitors as well ?

Jeremy535897

Dr_Spock123 said:

thanks for reply i will make this calculations and pay accordingly. So buying fees and selling are deducted from what i have to pay tax man. Does that include solicitors as well ?

You calculate the gross gain first. Ignoring improvements as it seems there weren't any, the gross gain is sale price less solicitors' fees of sale, less estate agents fees on sale, less purchase price, less solicitors' fees of purchase, less stamp duty on purchase. All these are halved as you owned 50%.

You then exempt the period you lived in the house as your main residence, plus the last 9 months. Say half the gain was £50,000, and you lived there for 60 months, and didn't live there for 48 months (108 months total). You would exempt 69 out of 108 months, so the chargeable gain would be £50,000 x (108-69)/108 = £18,055. Assuming no other gains in 2021/22, you have an annual exemption of £12,300, so the taxable gain would be £5,755, charged at 18% or 28% depending on your tax rate.

[Deleted User]

Of paramount importance is the fact that the gain should have been declared and any tax paid appropriately 12 days ago.

There will be a penalty and interest is also accruing on any tax payable. It is essential that this is reported without any further delay.

Dr_Spock123

Thanks for replies you have all given me enough information. I've done the calculations i dont owe anything so do I have to still have to submit CGT form even if there is zero to pay.

Jeremy535897

There is no requirement to report if no tax is due.

Dr_Spock123

Thanks Jeremy you have been spot on with info, thanks for taking the time with all your replies

Jeremy535897

Dr_Spock123 said:

Thanks Jeremy you have been spot on with info, thanks for taking the time with all your replies

I should mention that if your share of the proceeds was more than £49,200, you will have to complete a self assessment tax return for 2021/22, if you don't already have to do so anyway. This is the case even if there is no tax due. It is just the 30 day reporting you don't have to do when there is no tax.

Dr_Spock123

It was just under 30k, I did see that if it was 4x 12300 i would have too, so no applicable.

Jeremy535897

You said £30,000 was 50% of the "net equity proceeds". Remember I said the mortgage is irrelevant. If you buy a property for £70,000 with a £70,000 mortgage, and sell it for £100,000, you will only receive £30,000 after the mortgage is paid off, but your proceeds are £100,000, not £30,000.