Capital Gains on property query

ukjoel

Hoping for some help as the govt forms are a bit confusing.

I am trying to work out how much CGT I may need to pay on my property.

I bought the property in December 1999 and lived there until June 02 when Work relocated me so I rented for approx a year and a half.

I bought and moved into a second property in March 04. Which is now my main home as I am staying down here.

I now intend to sell my first property. My understanding is that I dont pay CGT on the period Dec 1999 - March 04 as it was the only property I owned.

I also believe that as I lived in it there is a three year period from March 04 - March 07 where I dont have to pay CGT.

Please let me know if this is correct?
Also how does one calculate the CGT owed for the period March 07 - March 08 when it will be sold.

Property was bought @90k and anticipate sale @ 225k.
I did spend some money (10-15k) on the property and have receipts and also am married (but at present property in sole name) am unsure if this is relevent.

Am also concerned about proposed changes to CGT (which dont seem to be forthcoming from govt.)

Would I be wise to sell before April 1st or wait until afterwards?

Many thanks,

J

ukjoel

Sorry will add the detail below as requested.

I moved out in 2002 and property has been kept as it was as at first I went back weekends and couldnt rent it out as I needed to have the flexibility to move back in if work wanted me back at original location.

Got married in September 04 - Wife has never lived at original property although stayed there when she wasnt living at uni (no bills or anything with her name on so say no).

Original mail said I bought in March 04 but actual completion was October 03 however we didnt move in until March as place was uninhabitable. So we remained in a rented place until March 04 effectively with two owned houses, neither of which we lived in.

I switched jobs a year ago and we will not be returning to the area and intend to stay in current location permanantly. have just had first child and need to sell both properties in order to use the money to get something a little bigger.

Decided it made sense to sell the one we are not living in first.

Thanks

CLAPTON

still dont understand

property 1
bought dec 1999 for 90k
lived there from dec 1999 to feb 02
from feb 02 to march 04 you lived there occasional (at weekends
it was never let out ?
what happened between march 04 and now?

property 2
bought in Oct 03
moved in march 04
and lived there ever since.

ukjoel

property 1
bought dec 1999 for 90k
lived there from dec 1999 to feb 02
from feb 02 to march 04 you lived there occasional (at weekends
it was never let out ?
what happened between march 04 and now?

Pretty much the same. I bought it as my home in 1999 and did it up as such.
When work asked me to move I thought I would come back and see friends and occasionly did. Nothing has changed and the place is still there in the same condition as it was in March 04.

I know it seems mad I didnt rent it out but due to the nature of my work I had to be able to be back at very short notice (and as a result work paid me an allowance to rent- all taxed and legit at my second location). This was on the understanding I could return at short notice so I was not able to rent it out. Also having spent time doing it up I didnt want it wrecked prior to moving back. Work placement was anticipated to be 2 years, but ended up longer.

property 2
bought in Oct 03
moved in march 04
and lived there ever since.

Yes thats correct. All bills and bank statements sent through here and everything. We had no bathroom or kitchen when we bought hence the 5 month gap between buying an moving in. Again have proof of bills for kitchen and bathroom (and a small claims court action for bathroom which we won).

I know its a bit of a strange one but I started a new job 3 months ago hence there is no reason for me to return to the first house on a regular basis.

Hope this clarifies situation.

CLAPTON

CGT rules are due to change next tax year but if you sell before then i.e. before 5th April 2008 it goes something like this.

total period of ownership = 8yrs and 3months = 99 months

lived there as PPR Dec 99 to Oct 03 i.e. 3yrs 10months i.e. 46 months

bought for 90k
selling price 225k

gross gain = 225-90k = 135k
but you can deduct buying and selling costs plus 'improvements ' ... lets say 15k

so gain is 120k

asssuming you sell this tax year you can get taper relief of 30% (nothing next tax year)

so gain now 84k

you get PPR relief for period your lived there 46 months plus last 3 years so in total 82 months

so gain is now (99-82)/99 x 84k =14,424

less personal CGT relief of 9,200
so taxable gain is 5224

and you pay at the rate of 10, 20, 40% depending upon your tax band.

However, you can transfer half the house to your wife and use her 9,200 so you would pay nothing.
But ensure the transfer occurs before you sell otherwise she won't be able to claim.


check the maths however.

ukjoel

Right next question.
Would I be better selling before April 08 or after.

My understanding is that before April 08 I get taper relief but pay 40% of 5224 which is 2089.

After April 08 I work it out as 2053. Have used the above calculation but removed the taper relief element and figured tax at 18%.

Funny how little difference there is in the two figures.

I will go and tell the wife she wont get half a house then......

Ian_W

ukjoel wrote: »

I will go and tell the wife she wont get half a house then......

If we don't hear from you by Friday - we'll call the cops!