We are seeking advice to assist our elderly parents. They are contemplating the sale of their present home and the purchase of a purpose built retirement property.
Prior to taking up residence in their present property some two years ago, they had rented it out for 25 years and had never lived in it, They have been advised that as a consequence there is a significant CGT liability should they sell.
They originally purchased this property in December 1990 at a cost of £51,000 and it was rented out from that date until March 2015, at which date they sold their then main home and moved into the ex-buy to let as a downsizing action. It is presently valued at £140,000.
They would now like to purchase a sheltered retirement home, but are concerned at the amount of equity they will have available from the proceeds of the sale when their ex buy to let present main home is sold, and the CGT liability has been met
We would be grateful if someone knowledgeable could run the above figures to provide an estimate of the amount of equity that will be available once the CGT liability has been met on the sale of their present home. Their income is modest and significantly below the 40% tax band, so their CGT rate should be 18%.
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