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Reducing CGT due on sale of property
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scottishblondie
Posts: 2,495 Forumite


in Cutting tax
I'm selling a property and am now realising that CGT is going to come into play. I purchased in December of 2003, moved out in January 2013, the property has been let since. I bought for £159k and currently considering an offer of £215k. To be honest I hadn't realised the impact that CGT might have on this sale, but it looks like I'll have about £6k to pay in tax. We've been counting on this sale to pay off a significant portion of our residential mortgage, and it feels like every penny kind of counts here!
I have always been the sole owner of the property, but I am also married. It appears that if I give half of the property to my husband, he will get his own CGT allowance and therefore we could share the gain and reduce the tax significantly. From what I had read it seems that as we are married the "ownership" date would be the same for both of us, so instead of a £26k taxable gain for me it would be £13k each?
Is it too late in the day to have my husband added as a co-owner? I'm concerned about the timelines and it causing an issue with the buyer's mortgage etc. as I've often seen the "6 months of ownership" rule thrown about for mortgage approval but I'm not sure if that would count when just adding one owner?
Also trying to figure out the "costs" that I can deduct from this purchase - for example we had to pay out £12k in 2018 for repairs to the building, but it seems like that would just be maintenance rather than an improvement? I will also need to try and find out what all the costs were when I purchased - hopefully I have it all filed away!
TIA for any help here.
I have always been the sole owner of the property, but I am also married. It appears that if I give half of the property to my husband, he will get his own CGT allowance and therefore we could share the gain and reduce the tax significantly. From what I had read it seems that as we are married the "ownership" date would be the same for both of us, so instead of a £26k taxable gain for me it would be £13k each?
Is it too late in the day to have my husband added as a co-owner? I'm concerned about the timelines and it causing an issue with the buyer's mortgage etc. as I've often seen the "6 months of ownership" rule thrown about for mortgage approval but I'm not sure if that would count when just adding one owner?
Also trying to figure out the "costs" that I can deduct from this purchase - for example we had to pay out £12k in 2018 for repairs to the building, but it seems like that would just be maintenance rather than an improvement? I will also need to try and find out what all the costs were when I purchased - hopefully I have it all filed away!
TIA for any help here.
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Comments
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Have you got an estimated value of the property in 2013 - I think thats when the CGT will kick in from.
I think this combined with the 12k costs ( don't forget to add in your solicitors costs at both ends ) will make your CGT go away...0 -
DE_612183 said:Have you got an estimated value of the property in 2013 - I think thats when the CGT will kick in from.
The CGT calculation will be based on the appreciation in value over the entire period of ownership from December 2003 until when the property is sold, with a proportional deduction for the number of months in which it was the OP's main residence (plus potential deductions for buying & selling costs and improvements).
Any rise in value is assumed to be linear over the whole period of ownership.1 -
p00hsticks said:DE_612183 said:Have you got an estimated value of the property in 2013 - I think thats when the CGT will kick in from.
The CGT calculation will be based on the appreciation in value over the entire period of ownership from December 2003 until when the property is sold, with a proportional deduction for the number of months in which it was the OP's main residence (plus potential deductions for buying & selling costs and improvements).
Any rise in value is assumed to be linear over the whole period of ownership.
There is a calculator on the HMRC website.0 -
If you are already selling you have missed the boat on doing this.0
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Keep_pedalling said:If you are already selling you have missed the boat on doing this.
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I doubt the effort of transferring an interest in the property to your husband would be worthwhile just for the annual exemption. It will also be affected by what tax rate each of you would pay.
https://www.gov.uk/capital-gains-tax/rates
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scottishblondie said:Keep_pedalling said:If you are already selling you have missed the boat on doing this.
You would gain a second CGT allowance, but that is only £3,000. Far more important is both your marginal rates of tax.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
silvercar said:scottishblondie said:Keep_pedalling said:If you are already selling you have missed the boat on doing this.
You would gain a second CGT allowance, but that is only £3,000. Far more important is both your marginal rates of tax.
Being a basic rate payer who has used virtually all the basic rate band will push most of the gain that is taxed I to the higher CGT rate.0 -
silvercar said:scottishblondie said:Keep_pedalling said:If you are already selling you have missed the boat on doing this.
You would gain a second CGT allowance, but that is only £3,000. Far more important is both your marginal rates of tax.
We are both higher (Scottish) rate tax payers. I nearly did change the ownership a couple of years back due to income tax purposes - I was pushing the top end of the higher rate tax band with the rental income being added to my employment income, whereas my husband is at the lower end of the tax band and realistically any "profit" was being added to the household pot - but I never got around to it for some reason. Kicking myself for it now!
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scottishblondie said:silvercar said:scottishblondie said:Keep_pedalling said:If you are already selling you have missed the boat on doing this.
You would gain a second CGT allowance, but that is only £3,000. Far more important is both your marginal rates of tax.
We are both higher (Scottish) rate tax payers. I nearly did change the ownership a couple of years back due to income tax purposes - I was pushing the top end of the higher rate tax band with the rental income being added to my employment income, whereas my husband is at the lower end of the tax band and realistically any "profit" was being added to the household pot - but I never got around to it for some reason. Kicking myself for it now!
I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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