reduce capital gains tax bill

butmummac

Hi I've just accepted offer of120k for a prop that i had lived in for about 7 years and subsequently rented out for the last 10 years. I bought if for 25k and have spent about 25k on it reburshing etc. Can anyone give me any idea what figures I may be lookin at. I am living with my partner, not marries he's self emp and have 3 children. Thanks

CLAPTON

basically like this

gross gain is :
selling 120000
less purchase price of 25,000
less improvements 25,000
less selling costs say 3,000

so gross gain is 67,000

as it was your principal residence for 7 years (you should work this out in months but same priniples apply)

then the period of residence plus the last 3 years are discounted so thats
a discount of (7+3) /17 x 67,000 = 39,411
hence gain now = 27,588

less letting relief ... in this case will be same as PPR relief i.e. 39,411

so no CGT payable.



PS should have said thet the 25,000 off for improvment swill only apply if they were or a 'capital' type rather than maintenance.

fengirl_2

Selling price 120000
Cost price 25000
Gain 95000

Total ownership period 17yrs x 12 = 204 months (but work out exactly how many mths)

Exempt period of charge 7 yrs, plus final 3 yrs = 10ys x 12 = 120 mths
Exempt charge 95000/204 x 120 = 55883

Chargebale gain 95000 - exempt 55883 = 39117
This is covered by let property relief, so no CGT to pay.
Your marital status and children are not relevant.
I have left out your renovations as only certain renovations are allowable, also your legal and professional fees, but you are exempt anyway.

butmummac

thanks so much for your help. I am thrilled with these figures, was expecting to pay about 8k, can't believe it!!!!!!!

fengirl_2

And how amazing that two answers came out almost the same quite independently!