Capital Gains on a 2nd property

[Deleted User]

Jeremy535897 said:

purdyoaten2 said:

Jeremy535897 said:

Letting relief disappeared for gains after 5 April 2020, unless you had a lodger, as set out in HS283 (the first link I supplied).

Taking your approximate figure of £100,000 as the gain, the chargeable part would be about 75 months and the exempt part would be about 285 months. So the chargeable gain would be £100,000 x 75/(285+75) = £20,833. If the house is owned equally between you and your partner, the gain would be £10,467 for each of you, which is within your annual exemption, if no other gains were made in the same tax year by you both.

I appreciate that, like me, you have attempted to assist with an example. The methodology used by the ‘accountant’ is the most worrying aspect of the op and I was keen to deflect from that - but our posts crossed.

Yes, I agree. I had not picked up on the point that the value given was at the date of moving out. It never crossed my mind that an accountant could ever think that a value at that date could be relevant. The original cost is probably much smaller than £250,000, and therefore the chargeable gain will be bigger. If we assume that the original cost was £100,000, say, the chargeable gain becomes something like £350,000 less £100,000 = £250,000 x 75/(285+75) = £52,083. Half each is £26,042, less £12,300 annual exemption (subject to there being no other gains in the tax year), gives £13,742 (subject to purchase costs, improvements and selling costs).

The rate of tax payable depends on the vendors' taxable income:
https://www.gov.uk/capital-gains-tax/rates

The gain is reportable and the tax is payable within 60 days of completion, as per my earlier link.

I think that we need some clarification from the op with regard to his last post?

Jeremy535897

Yes, there seems to be no consistency at all.

regional

Whoops sorry all we moved out 2014...less haste and all that 

regional

[Deleted User] said:

Jeremy535897 said:

[Deleted User] said:

Jeremy535897 said:

Letting relief disappeared for gains after 5 April 2020, unless you had a lodger, as set out in HS283 (the first link I supplied).

Taking your approximate figure of £100,000 as the gain, the chargeable part would be about 75 months and the exempt part would be about 285 months. So the chargeable gain would be £100,000 x 75/(285+75) = £20,833. If the house is owned equally between you and your partner, the gain would be £10,467 for each of you, which is within your annual exemption, if no other gains were made in the same tax year by you both.

I appreciate that, like me, you have attempted to assist with an example. The methodology used by the ‘accountant’ is the most worrying aspect of the op and I was keen to deflect from that - but our posts crossed.

Yes, I agree. I had not picked up on the point that the value given was at the date of moving out. It never crossed my mind that an accountant could ever think that a value at that date could be relevant. The original cost is probably much smaller than £250,000, and therefore the chargeable gain will be bigger. If we assume that the original cost was £100,000, say, the chargeable gain becomes something like £350,000 less £100,000 = £250,000 x 75/(285+75) = £52,083. Half each is £26,042, less £12,300 annual exemption (subject to there being no other gains in the tax year), gives £13,742 (subject to purchase costs, improvements and selling costs).

The rate of tax payable depends on the vendors' taxable income:
https://www.gov.uk/capital-gains-tax/rates

The gain is reportable and the tax is payable within 60 days of completion, as per my earlier link.

I think that we need some clarification from the op with regard to his last post?

Yep your calculations seem to follow the formula we now have. Thank you so much for taking the time out to do this.