Sold Primary Residence after a period of absence - CGT help please

Tomabz

Hi,

We bought our home in 2004 but moved house in 2022 (I needed to get a more suitable property due to my disability). Our old house was in need of some repair, so there was a year or so where work was ongoing, followed by another 2 1/2 years where it was on the market and just not selling (due to the downturn in local property prices), but thankfully, we have now managed to sell it.

As I understand it, because the old house wasn't our primary residence for that 3 1/2 year period, we would not be entitled to the CGT exemption for that period (apart from the last 9 months which I think you're always entitled to), so about 3% of the change in value would be taxable as a capital gain (based on the number of months that we owned it and the number of months that we did not actually live in it).

Can anyone tell me whether there is any additional relief available for the periods where the house was being renovated or not selling due to market conditions?

regards

Dave

Tomabz

Oooops, I made a type - the actual period works out as 13% not 3 - the CGT hit will be appreciable if there are no additional reliefs available :-(

Keep_pedalling

You can deduct both selling and buying costs.

Tomabz

https://forums.moneysavingexpert.com/discussion/comment/81968648#Comment_81968648

Hi, thanks, yes, but that still leaves a large CGT liability, I was asking whether there were any additional allowances to take account of the circumstances described

Keep_pedalling

What was the original purchase price and the amount it sold for?

mta999

google

pro rata house cgt for time living there as main residence

sheramber

There are no allowances for the time the house was empty for repairs or trying to sell.

You can deduct buying and selling costs.

poseidon1

There Is of course the annual £3,000 CGT exemption you each are entitled to if not already utilised on other asset sales.

Will the gain be large enough to push you into the 24% CGT tax band?

Alternatively if the sale was in the current tax year, do you have any losses on shares that could be realised and offset against the current gains?

Also examine whether any of the property refurbishments constituted capital improvements (rather than repairs), the cost of which can be added to your original cost.

Tomabz

Thanks for the comments.

Owning the house for twenty odd years, even with the recent downturn in prices in the area, the sale price is some 25% more than we paid for it so there is an appreciable CGT liability and we will be in the 24% band. It might sound a lot, but the increase in sale price is significantly LESS than price inflation between the two dates, i.e., the house is actually worth less in real terms.

I was aware of the £3000 exemption and the deduction that we can make for refurbishments that we made along the way as well as the ability to offset other losses on shares etc.

Having had to move out and struggling to get it sold for some time, it is just ridiculous that we're having to pay CGT on inflation, i.e., being taxed on real term losses!

silvercar

Roughly speaking you are paying CGT on about one seventh of the gain. Shared between you.

Post some real figures if you want a proper calculation.

It does seem that your value hasn’t increased by much, I bought in 2006 and we are up about 80% on purchase price.

Tomabz

https://forums.moneysavingexpert.com/discussion/comment/81970474#Comment_81970474

The house price is up about 40% over the period since 2004.

We spent about that on refurbishments. I aware aware that I should be able to offset those costs, but, as this was supposed to be my "forever" home, many of the receipts have gotten lost along the way, so it would he hard to demonstrate that the money was spent. Unfortunately, a couple of the bigger "investments" were with companies that are no longer in business and duplicate receipts are not an option (bank statements don't have the detail that would be needed.)

(I don't need help with the calculation, I was just hoping that I'd missed some reliefs that might be applicable to reduce the liability)