Capital Gains Tax

[sussexbethany]

My husband and I married in May 2006. At that time we both owned properties and agreed to live in my house as our main residence. We kept his flat only allowing family members to stay there for payment which just covered the cost of the morgage on that property. We have now decided to sell the flat and need to ascertain if we will be liable for capital gains tax? Can anyone give me advice please?

[Peter D]

It is normally assumed by HMRC that the default PPR is that of the husband. However you could have electeded your property as your home and PPR but there is a 2 year window to do that from the point where you had a choice. However if your husband changed all his contacts addresses, DVLA, Electoral registar and HMRC cantact address then HMRC may well accept your property as your joint PPR.
SO selling the flat will attract PPR so the last 36 months of ownership will be exempt from CGT so only a year of CGT exposer. You need to tell us the value at purchase and the st sale value and any associated sales and legal costs. The resulting gain my be below his capital gains allowance of £10,000. Did he 'rent' it to family members or just an 'informal' arrangement and for how long did they stay. Regards Peter

[sussexbethany]

Peter

Thank you for this information. My husband purchased the flat approximately 15 years ago at a price of £29,000. It is being sold at a price of £143,000. The solicitors fees and estate agents fees total approximately £3,500 and there is a mortgage to be paid off of £17,100.

When family members have stayed at the flat it has only been an informal arrangement. Lately his daughter was staying there but she is moving out and that is why we have made the decision to sell.

Who is the best person to contact to help us complete a self assessment tax form and ensure that we make the correct declaration? Your views are very much appreciated. Thank you.

[Peter D]

Based of the rough date you have detailed then ther is no cgt as the gain after PPR relief is only about £9,000 and your husabd, if unused, had Capital Gains Allowance of £10,100. I need full dates to be sure. Regards Peter

[Incredulum]

You might have some entitlement to letting relief too.


It's very unclear to me that there is any doubt over which is the PPR - has your husband ever lived in the flat since marrying you?