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Help ctg question

Emabish
Posts: 4
Joined: Thu May 17, 2018 7:09 am

Help ctg question

Postby Emabish » Thu May 17, 2018 7:19 am

Hi

Hoping someone can advise me here?

We bought our family Home for £87,000 in 1996 and lived in it until Dec 2016. We then rented it out for 16 months (went horribly wrong and had non paying tenant).

We are now selling the house which should go for £450,000 over the next couple of months. My husband is moving back into the house until we sell it.

I just did a CGT calculation online and it said the bill would be £91,500 😱😱😱😱😱

Can anyone please have a quick look and advise if this is correct.

Regards

Ema

Emabish
Posts: 4
Joined: Thu May 17, 2018 7:09 am

Re: Help ctg question

Postby Emabish » Thu May 17, 2018 8:17 am

Sorry - just to add. We are both higher rate tax payers.

We have spent £30,000 on extensions etc

Thanks in advance

someone
Posts: 283
Joined: Mon Feb 13, 2017 10:09 am

Re: Help ctg question

Postby someone » Thu May 17, 2018 8:32 am

Provided you sell within 18 months of the date you moved out, there will be no CGT to pay and no need to declare it on your tax return.

After that there still will be no tax to pay but you will have to include it on your tax return.

You will get 10K each of allowance plus some RLR (probably) so unless it doesn't sell for a few years it's unlikely the taxable gain will exceed the allowances.

(Assuming you didn't have another residence and make a cgt election, it apears that you have 20+ years of PPR)

Emabish
Posts: 4
Joined: Thu May 17, 2018 7:09 am

Re: Help ctg question

Postby Emabish » Thu May 17, 2018 12:59 pm

Thank you.

We bought the first house in December 1996 for £87,000 and lived it it for 20 Years. I transferred with work up north so we bought a bungalow for £215,000 and moved in Dec 16. We rented the London house and the tenant is moving out next week. We have just reached 18 months since we bought the 2nd house.

My husband is moving back into the house next week and we were considering having that house as our main residence. We will be spending a lot of time there as my husband still works in London.

someone
Posts: 283
Joined: Mon Feb 13, 2017 10:09 am

Re: Help ctg question

Postby someone » Thu May 17, 2018 1:29 pm

If you are intending to sell then occupying now won't help CGT calculations.

1. You get the last 18 months as PPR anyway so unless you live there for more than 18 months at the end it doesn't add to the ppr you get.

2. PPR requires some intent at permanence. As you are intending to sell then it's clearly not intended to be permanent.

But based on what you've said there will be no CGT on the house. In fact, it's probably to your advantage to make a PPR election in favour of the bungalow just in case HMRC decide that the house is your main residence between the tenant moving out and the sale.

someone
Posts: 283
Joined: Mon Feb 13, 2017 10:09 am

Re: Help ctg question

Postby someone » Thu May 17, 2018 1:32 pm

Just in case you're intending to replace the property and hoping to avoid the SDLT higher rate charge, CGT elections are irrelevant to that. I think you will be OK but the new home MUST be your main residence 'on the facts' otherwise the higher rates will apply.

Emabish
Posts: 4
Joined: Thu May 17, 2018 7:09 am

Re: Help ctg question

Postby Emabish » Thu May 17, 2018 1:39 pm

Just in case you're intending to replace the property and hoping to avoid the SDLT higher rate charge, CGT elections are irrelevant to that. I think you will be OK but the new home MUST be your main residence 'on the facts' otherwise the higher rates will apply.
Thank you for your replies.

Do we have to elect a main residence or do you suggest just selling the London house and do a tax return. This really is a minefield for us. We only rented the London property to allow us to move quickly and didn’t anticipate these issue (should have done our homework!!)

We are looking to sell the London house Asap. We will probably then live in the bungalow once the London house is sold. At some point we will sell the bungalow and buy one slightly larger house.

We only want to own one home in the future.

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