Cap Gains Tax/let to buy

sunnydisposition_2

We remortgaged a smaller flat to allow us to buy a larger one on a let to buy mortgage. We have sold the smaller flat, after three and a half years, and will have to pay CGT. Does the let to buy mortgage status make any difference to the calculation? Thanks.

sunnydisposition_2

And also, if our flat lay empty and unrented for a year, would we be able to minus the year's mortgage payments from the sum?

CLAPTON

can you be a bit more precise

you have two flats a smaller one and a larger one

did you live in the smaller one and if so give fulldetails
did you live in the larger one, if so give full details

sunnydisposition_2

Thanks for getting back. We lived in the first flat for two and a half years and then moved into the bigger flat and have lived there six years, whilst renting the other flat for three years before selling it. It was rented out successfully for two years, then lay empty for one whilst we waited for a sale which fell through, wrecking our finances in the process. As you will have worked out, I am late with my tax as I am one of those pathetic moneyfearing ostriches. I will be penalised. I have pulled myself together and will be pro-active from this year.

CLAPTON

on the first flat you are potentially liable to CGT however it will probably be zero or very low.

If you want to give full details I will show you how to work it out

when did you buy it (month and year)
when did you sell it?
when did you live in it?
buying price?
selling price?
buying and selling costs (estate agent, solicitors fees etc)
is it jointly owned?
were you married?

rental income and your mortage (interest ) payments are only relevant to your income tax calculations and do not affect CGT

sunnydisposition_2

Thank you for your help. Will I post it on this thread? It will take most of this evening to dig the info out and make sense of it. Hope that's OK.

CLAPTON

for the purposes of the showing the calculation approximate figures would be OK then you could rework them at your leisure.

sunnydisposition_2

Clapton, thank you for offering to help. It will give me a rough idea of what to expect when I send the rest of my forms in. I really appreciate you taking the time. Sorry it took so long to get back, but a relative passed away this morning and there were a lot of calls to the family to make. Any more info you need, please feel free to ask me, or PM me, or whatever.

Cap Gains Tax Calc

All mortgages interest only

Purchase price of small flat 5/5/99 108,000

Fees for purchasing small flat 1,000

Stamp Duty/Land Registry etc 1,080

Completion of sale of small flat 9/9/05? 203,000

Deductions/fees for sale of small flat (incl aborted sale) 9,620

Outstanding mortgage 156,650

Ground Rent for period owned 300
Service Charge 5,000
Council Tax 4,000
Upkeep/rental agency fees 2,500

We lived in it from June 99 till Dec 01. We are not married – but I can do quickly if it helps! We have been together 21 years. It is jointly owned, but so far I have been the only person to pay tax on earnings etc. I am schedule D, earn nowt and my partner is PAYE, paying 40% tax.

Within that period, we remortgaged to afford a bigger flat, dunno if you need this info?

Let to Buy Re-Mortgage 13/9/01 145,000
Outstanding Mortgage 98,000
Fees/costs 1,200

New Mortgage 213,600
Fees/costs 7,500
Stamp Duty/Land Registry etc? 3,060

sunnydisposition_2

Oh, I hate to be pushy, but any chance of a hint of the CGT I might owe today at some point? I'd really like to know as soon as poss how much money I will have to find to cover what I owe and the penalties. Really soz to poke you.

silvercar

I'm totally confused. You sold the smaller flat in 2005? If this is true you would have included details in your tax return for 2005-06 and have paid any tax due by January 2007.

or is this a mistype and you really mean 2007? Assuming it is you have a gain of 95k less costs of 11.7k= 95-11.7=83.3k. living in it for 2.5 years woluld give you CGT exemption for then plus the last 3 years so 5.5 years in total out of the 8 years of ownership.

83.3 x 2.5 of 8 yrs = 26k. You would also get letting relief which is limited to 40k or the PPR relief or the relief when it was let (whichever lower). If this was restricted to the 2 years it was actually let it would be 20.8k, leaving you with a liability on 26-20.8k= 5.2k.

This is well within the 9.2k CGT allowance that you each get, so unless anyone can see errors in my calculations, I reckon there is no CGT to pay.

sunnydisposition_2

Yes, I am behind with my tax. If the dates are correct - 2005 - does that mean I should owe nothing? If so, I may have to be scraped off the roof with delight!