Managing CGT from House Sale

JPin

Hi All,

I wanted to check what is the best way of managing the CGT tax from the sale of a rental house. I have a share of it and I thought the best way to manage this was through my accountant. I got a quote from an accountant which is 0.75% of the final sale price of the property plus tax. This seems a little high which leads me to two questions:

1. Is my best course of action to employ an accountancy firm to manage the tax side and if not what is the best course?
2. If an accountancy firm is the best course, what prices should I expect, or is what was quoted above normal?

eskbanker

JPin said:

I wanted to check what is the best way of managing the CGT tax from the sale of a rental house.

Not sure what 'managing' you're requiring - on the face of it you should be able to identify your costs of acquisition and disposal and declare chargeable gains from those, but why do you feel that paid professional assistance is needed?

JPin

eskbanker said:

JPin said:

I wanted to check what is the best way of managing the CGT tax from the sale of a rental house.

Not sure what 'managing' you're requiring - on the face of it you should be able to identify your costs of acquisition and disposal and declare chargeable gains from those, but why do you feel that paid professional assistance is needed?

Fair question, I guess I felt they would be able to advise what expenses over the years I could offset and process these and send to HMRC. I have no idea how to do this.

diystarter7

We've done it ourselves when gifting a property. I'm no expert but it was relatively easy via self-assessment.
Before that we/I even managed to to transfer the apartment that came with a service charge/lease etc.

We had a valuation in written form, price we paid, expenses/etc and as there was no mortgage on it - it was straightforward. Btw, I did ring HMRC re one query to put my mind at rest, but it was relatively easy   - never enquired what we would need to pat someone else for that but I guess at least 2k on the apartment in London .

JPin

diystarter7 said:

We've done it ourselves when gifting a property. I'm no expert but it was relatively easy via self-assessment.
Before that we/I even managed to to transfer the apartment that came with a service charge/lease etc.

We had a valuation in written form, price we paid, expenses/etc and as there was no mortgage on it - it was straightforward. Btw, I did ring HMRC re one query to put my mind at rest, but it was relatively easy   - never enquired what we would need to pat someone else for that but I guess at least 2k on the apartment in London .

I do the annual self-assessments in January when the property was rented out, is this similar?

eskbanker

JPin said:

eskbanker said:

JPin said:

I wanted to check what is the best way of managing the CGT tax from the sale of a rental house.

Not sure what 'managing' you're requiring - on the face of it you should be able to identify your costs of acquisition and disposal and declare chargeable gains from those, but why do you feel that paid professional assistance is needed?

Fair question, I guess I felt they would be able to advise what expenses over the years I could offset and process these and send to HMRC. I have no idea how to do this.

Have you read through guidance such as https://www.gov.uk/tax-sell-property/print and associated more detailed HMRC manuals?

Deduct costs

You can deduct costs of buying, selling or improving your property from your gain. These include:

• estate agents’ and solicitors’ fees
• costs of improvement works, for example for an extension (normal maintenance costs, such as decorating, do not count)

[Deleted User]

JPin said:

diystarter7 said:

We've done it ourselves when gifting a property. I'm no expert but it was relatively easy via self-assessment.
Before that we/I even managed to to transfer the apartment that came with a service charge/lease etc.

We had a valuation in written form, price we paid, expenses/etc and as there was no mortgage on it - it was straightforward. Btw, I did ring HMRC re one query to put my mind at rest, but it was relatively easy   - never enquired what we would need to pat someone else for that but I guess at least 2k on the apartment in London .

I do the annual self-assessments in January when the property was rented out, is this similar?

The big difference is that you have to declare the gains AND pay the tax due within sixty days of completion. This gain also must be declared on a self-assessment return for the corresponding tax year with credit for the tax paid previously. 

JPin

eskbanker said:

JPin said:

eskbanker said:

JPin said:

I wanted to check what is the best way of managing the CGT tax from the sale of a rental house.

Not sure what 'managing' you're requiring - on the face of it you should be able to identify your costs of acquisition and disposal and declare chargeable gains from those, but why do you feel that paid professional assistance is needed?

Fair question, I guess I felt they would be able to advise what expenses over the years I could offset and process these and send to HMRC. I have no idea how to do this.

Have you read through guidance such as https://www.gov.uk/tax-sell-property/print and associated more detailed HMRC manuals?

Deduct costs

You can deduct costs of buying, selling or improving your property from your gain. These include:

• estate agents’ and solicitors’ fees
• costs of improvement works, for example for an extension (normal maintenance costs, such as decorating, do not count)

When making initial enquiries, the accountant indicated that improvements were not straightforward. For example, I upgraded all of the old tattered windows and outside doors from old wood to new PVC windows and I upgrades the boiler. This improved the EPC, the accountant said this did not count as an improvement.

I also replaced the old outdated bathroom twice during the 12 years we have had the property, again the accountant said this was not an improvement.

The electrics were also upgraded which also does not count.

The above were things I thought did count therefore at least the accountant has shown my own shortfalls. 

eskbanker

Fair enough - if you're primarily seeking detailed tax advice relating to interpretation of the rules about improvements (as opposed to help submitting a form as such) then it does sound like you could benefit from some help.  A quick Google comes up with plenty of options for CGT advisors, perhaps they're a better bet than more generic accountancy services?

Jeremy535897

The cost of setting someone up as a new client will be higher than the cost of providing the advice. You can read it for yourself:
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg15180 et seq
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2030

[Deleted User]

JPin said:

eskbanker said:

JPin said:

eskbanker said:

JPin said:

I wanted to check what is the best way of managing the CGT tax from the sale of a rental house.

Not sure what 'managing' you're requiring - on the face of it you should be able to identify your costs of acquisition and disposal and declare chargeable gains from those, but why do you feel that paid professional assistance is needed?

Fair question, I guess I felt they would be able to advise what expenses over the years I could offset and process these and send to HMRC. I have no idea how to do this.

Have you read through guidance such as https://www.gov.uk/tax-sell-property/print and associated more detailed HMRC manuals?

Deduct costs

You can deduct costs of buying, selling or improving your property from your gain. These include:

• estate agents’ and solicitors’ fees
• costs of improvement works, for example for an extension (normal maintenance costs, such as decorating, do not count)

When making initial enquiries, the accountant indicated that improvements were not straightforward. For example, I upgraded all of the old tattered windows and outside doors from old wood to new PVC windows and I upgrades the boiler. This improved the EPC, the accountant said this did not count as an improvement.

I also replaced the old outdated bathroom twice during the 12 years we have had the property, again the accountant said this was not an improvement.

The electrics were also upgraded which also does not count.

The above were things I thought did count therefore at least the accountant has shown my own shortfalls. 

All things considered, on the basis of the advice given, I would keep the accountant. Aside from anything else it is difficult to gauge in financial terms the removal of the stress that some experience when tackling tax issues for the first time.