Help! What CGT do we have to pay?

LollyBol

So the situation is this, 
Bought a house in 2007 with my brother, both lived there until 2012. 

I now have my own house, so does my brother. 

Let it out to our mum for the last 8 years. No profitable gain apart from her paying the mortgage amount. 

Now sold the house. How do we work out Capital gains tax and how much we have to pay. Are we entitled to Personal relief ? 

Olinda99

total ownership = 25yrs x 12mo = 300 months (adjust accordingly)

total years not main residence = 19yrs x 12mo = 228mo (adjust accordingly)

gain= sale price - purchase price - allowable costs (eg purchase costs, sale costs, improvements etc)  

gain is split into two as joint ownership I assume tenants in common

thus gain subject to cgt = your gain x 228 / 300 less cgt allowance for each person

theartfullodger

HMRC have the power to tax your income on actual value (market rent) rather than the cheapo deal you gave. (Clearly not in your case, no criticism at all,  but there's an obvious fiddle available using such an arrangement)

You've declared and paid tax for ALL the rent paid to HMRC??

Best regards to all.

Olinda99

no they don't. You can charge whatever rent you want, no matter how little. HMRC cannot tax you on a higher amount

What letting below market rent may do is reduce the amount of expenses you can claim against rental income

saajan_12

LollyBol said:

So the situation is this, 
Bought a house in 2007 with my brother, both lived there until 2012. 

I now have my own house, so does my brother. 

Let it out to our mum for the last 8 years. No profitable gain apart from her paying the mortgage amount. 

What happened with the property between 2012 and 2017? (was only one of you living there, or was it let out to someone else?)

Were you paying income tax on the rental income? Covering the mortgage is largely irrelevant as much of that is capital repayment which is not deductible as an expense. The tax relief on mortgage interest has been gradually reduced in the last few years too, and limited to basic rate recently (even if you're paying tax at higher rate). 

The sale may prompt an investigation if nothing has been paid so far. 

LollyBol said:

Now sold the house. How do we work out Capital gains tax and how much we have to pay. Are we entitled to Personal relief ? 

Yes, you'd just look at your share and how long you lived there. So if it was owned 50/50 then what was your half of the sale price, less your half of purchase price, solicitors costs, agent costs, etc. 

Then you'd get PPR relief for the time you lived there, ie 5 / 18 years = 28% (actually calculate in months). You'd also get annual allowance on £3k if you haven't made any other capital gains in that time (eg sold stocks & shares). Then pay tax on the rest. 
Note the period of residence may be different for each of you.