Capital Gains Tax on Property

Tizwoz23

Hello All,

Thank you in advance for any help you are able to give.

I have consulted the government website and note that if you are selling a home in which you do not reside you are liable to capital gains tax (CGT).  However, I understand that you can get Primary Residence Relief but the amount depends on different situations which is where it gets confusing.

So let me explain my situation:

I bought and lived in a two up two down with my boyfriend in Nov 2001 for £78,000 (equal share).  In 2011 we pooled our savings and spent circa £80,000 on an extension.  In Aug 2019 my boyfriend gifted his share of the house to me (no moneys exchanged) so the house was registered solely in my name.  At this time the house was valued at £240,000 on the HM Land Registry.  We continued to live in the house until Oct 2021 at which time we moved to a new house my boyfriend bought.  I kept my house which we visited a couple of times a year but I spent the majority of my time at his house.  My boyfriend’s house was some distance from mine so I registered on the electoral register at his address. 

I am now considering selling my house and would like to know if I would be liable to CGT and how much this would likely be.  My house is worth circa £425,000. 

Your help is much appreciated.

Jeremy535897

Your base cost for your house is as follows:
Your share of the cost £39,000 (plus your share of legal fees etc) plus your share of the extension £40,000 plus one half of the value in 2019 £120,000, total £198,000 (your boyfriend would have had a capital gain on the gift in 2019 but it would presumably have been covered by his main residence exemption). A sale at say £420,000 after selling costs would give you a capital gain of £222,000.
The house would have been your main residence for 20 years, and the last 9 months are exempt as well (so 249 months exempt), so if you sold it in say October 2024 (ownership period 23 years or 276 months) the chargeable gain would be £222,000 x (276-249)/276 = £22,000 approximately. Assuming you have no other losses or gains, you could deduct your annual exemption of £3,000, leaving £19,000 chargeable at 18%, 24% or a mixture of the two, depending on your income:
https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances
Report and pay the tax within 60 days of completion:
https://www.gov.uk/tax-sell-property
The above assumes that you are not married or in a civil partnership, and did not nominate your property as your main residence when moving in with your boyfriend (although on the facts this is unlikely to have had any effect).

Tizwoz23

Jeremy535897 thank you so much for your reply. A couple more questions if I may:
1. Why does my boyfriends gift of his half of the house to me in 2019 count as a base cost for the house?
2. Will HMRC require receipts for the extension and original legal fees?

Thanks again

[Deleted User]

Tizwoz23 said:

Jeremy535897 thank you so much for your reply. A couple more questions if I may:
1. Why does my boyfriends gift of his half of the house to me in 2019 count as a base cost for the house?
2. Will HMRC require receipts for the extension and original legal fees?

Thanks again

1. That is the date that you ‘purchased’ the second half of the house - the fact that no money was exchanged is irrelevant and is to your advantage. The value at that time is the only relevant figure. 

2. In the event of any enquiry you would be expected to provide same.

Bookworm105

who did the 2019 £240,000 valuation?
As you can see it is an important figure for the tax calculation, so the integrity of the amount matters if HMRC decide to challenge it.

Tizwoz23

The valuation was the lowest from three estate agents at the time.

Thank you for all your comments it has been very useful.

[Deleted User]

Tizwoz23 said:

The valuation was the lowest from three estate agents at the time.

Thank you for all your comments it has been very useful.

Excellent - that was a very wise thing to have done!