Capital Gains Tax

danii_d

I was wondering if anyone would be able to help explain the Capital Gains Tax? 

I purchase my property in October 2013 for £60,000 and sold it in October 2021 for £120,00.  

I lived in the house from October 2013-October 2018 (5 years/60 months).  I rented the property from the end of October 2018-Sept 2021 (2 years 1 month/25 months) and moved in with my partner (not added onto his mortgage) to see if I could move to the country or if we needed to find a house in the city together. I sold the property to the tenants as they had expressed their interest in purchasing it.  I am unsure how much I need to pay i have been made aware it would be 18% but not sure of what I need calculate the 18% of. 

Thanks  

p00hsticks

There's a 'CGT on propery' calculator on the government website here that you can plug your figures into.

https://www.gov.uk/tax-sell-property/work-out-your-gain

Roughly, as I understand it;

your total gain is £60,000, less the cost of buying and selling the property (estate agents and conveyancers fees etc)

The proportion of that that is liable for CGT is(time you didn't live in it in months / total time owned in months plus 9)

(You get the 9 for free as it was once your main residence )

so the overall gain - excluding the costs, which you don't mention is (25/(60+25+9)) x 60,000 which comes to just under £16,000

You have an annual  CGT allowance of £12,300, so assuming that you haven't laready used if for something else then that leaves £3,700 as your CGT liability, and its this that you'd take 18% of. 

 

But you are very late in thinking about all of this - any CGT owed should have been reported and paid to HMRC within 60 days of the completion of the sale. If you are lucky then by the time you include the buying and selling costs in the calculation  the figure will decrease to the point where you don't actually have anything at all to pay.     

[Deleted User]

The gain before reliefs is £60000. 

You owned the house for 96 months and lived in it as your main residence for 60 months. You can add 9 months to the 60 as it was your main residence at some point - 69/96 of the gain is covered by private residence relief which is 43125 leaving 16875. From this you can deduct your annual exemption of 12300 leaving 4575 chargeable at 18%, 28% or a mixture of both depending on your other taxable income. You can also deduct buying and selling costs at the first step of the calculation. 

More pertinent is the fact that the disposal should have been declared and tax paid within 60 days of sale in addition to including on a tax return for 2021/22. 

https://www.gov.uk/capital-gains-tax/reporting-and-paying-capital-gains-tax

danii_d

danii_d said:

I was wondering if anyone would be able to help explain the Capital Gains Tax? 

I purchase my property in October 2013 for £60,000 and sold it in October 2021 for £120,00.  

I lived in the house from October 2013-October 2018 (5 years/60 months).  I rented the property from the end of October 2018-Sept 2021 (2 years 1 month/25 months) and moved in with my partner (not added onto his mortgage) to see if I could move to the country or if we needed to find a house in the city together. I sold the property to the tenants as they had expressed their interest in purchasing it.  I am unsure how much I need to pay i have been made aware it would be 18% but not sure of what I need calculate the 18% of. 

Thanks  

Thank you so much for your help.  can I ask how you got the tow 25's in the sum (25/(60+25+)) x 60,000? my deduction for solicitors for buying and selling are £1152.60 and £674. my family lent me £7000 to purchase the house so I paid them that back when I sold this house but doubt that counts.

It was rented to tenants for 36 months.  so would you be able to help with the calculation so I know what I am paying tax on please? I am sorry to bother you but I am totally clueless. 

I know i had no idea about capital gains until now. Wish i had known sooner.

danii_d

I thought my solicitor would have at least mention the CGT to me and they didn't.  this was my first home and I have never bought or sold a property before.

Thank you so much for all your help it makes it easier when it is explained rather than reading articles online.

p00hsticks

danii_d said:

danii_d said:

I was wondering if anyone would be able to help explain the Capital Gains Tax? 

I purchase my property in October 2013 for £60,000 and sold it in October 2021 for £120,00.  

I lived in the house from October 2013-October 2018 (5 years/60 months).  I rented the property from the end of October 2018-Sept 2021 (2 years 1 month/25 months) and moved in with my partner (not added onto his mortgage) to see if I could move to the country or if we needed to find a house in the city together. I sold the property to the tenants as they had expressed their interest in purchasing it.  I am unsure how much I need to pay i have been made aware it would be 18% but not sure of what I need calculate the 18% of. 

Thanks  

Thank you so much for your help.  can I ask how you got the tow 25's in the sum (25/(60+25+)) x 60,000?

The 25 on the top is the time in months you weren't living in it (i.e. it was empty or rented out)

The figures are the bottom are for the total time you owned it plus 9 - you didn;t explicitly give that so I got to it by adding together the time you rented it out (25) and the time you lived in it yourself (60) plus the extra 9 you get for free.

But I wouldn't rely completely on my figures (as you can see purdyoaten2 came up with a slightly different answer, in part because he's come to a different amount of time you actually owned the house. Plug your figures into the offical calculator I gave a link to in the first post. And I think you need to make sure you don't double count months - e.g you either lived in the house in October 2018 or you rented it out, it can't be both.

[Deleted User]

p00hsticks said:

danii_d said:

danii_d said:

I was wondering if anyone would be able to help explain the Capital Gains Tax? 

I purchase my property in October 2013 for £60,000 and sold it in October 2021 for £120,00.  

I lived in the house from October 2013-October 2018 (5 years/60 months).  I rented the property from the end of October 2018-Sept 2021 (2 years 1 month/25 months) and moved in with my partner (not added onto his mortgage) to see if I could move to the country or if we needed to find a house in the city together. I sold the property to the tenants as they had expressed their interest in purchasing it.  I am unsure how much I need to pay i have been made aware it would be 18% but not sure of what I need calculate the 18% of. 

Thanks  

Thank you so much for your help.  can I ask how you got the tow 25's in the sum (25/(60+25+)) x 60,000?

The 25 on the top is the time in months you weren't living in it (i.e. it was empty or rented out)

The figures are the bottom are for the total time you owned it plus 9 - you didn;t explicitly give that so I got to it by adding together the time you rented it out (25) and the time you lived in it yourself (60) plus the extra 9 you get for free.

But I wouldn't rely completely on my figures (as you can see purdyoaten2 came up with a slightly different answer, in part because he's come to a different amount of time you actually owned the house. Plug your figures into the offical calculator I gave a link to in the first post. And I think you need to make sure you don't double count months - e.g you either lived in the house in October 2018 or you rented it out, it can't be both.

Slightly confused! The op states owned from October 2013 to October 2021 - 96 months.  Lived in it for 60 months. The additional 9 months is added to the 60, not the 96! Maybe I have missed something?

[Deleted User]

So the gain is 120000 - 60000 - 1826 = 58174. 

Exempt 69/96 = 41812 leaving 16362. Take off annual exemption 12300 - 4062 chargeable. The reason that I set it out this way is because that is what is requested on the online form. Proceeds. Cost.  Expenses. Reliefs. 

The point about double counting months is a good one!

danii_d

I really appreciate the way you have lay it out. you are really helpful. 

Do I pay 18%-28% depending on my total income. so 16362 equalling (18% = 2945.16) or (28% = 4581.36)?

or do I pay 18%-28% it on the 41812?

I am so sorry for my many questions. I have read the HMRC and tried to calculator but not confident i have completed it correctly.

danii_d

The tenants move into the house on 26 October to rent.  I moved out on 25 October so would i count that as the tenants living in it that month or would I have been classes as living in it that month?

[Deleted User]

danii_d said:

I really appreciate the way you have lay it out. you are really helpful. 

Do I pay 18%-28% depending on my total income. so 16362 equalling (18% = 2945.16) or (28% = 4581.36)?

or do I pay 18%-28% it on the 41812?

I am so sorry for my many questions. I have read the HMRC and tried to calculator but not confident i have completed it correctly.

No - you can relax a bit - you pay 18-28% on 4062 only! £731.16 in total if at 18%!