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Where Taxpayers and Advisers Meet

CGT

MazzaMc
Posts:22
Joined:Mon Oct 31, 2016 4:39 am
CGT

Postby MazzaMc » Mon Oct 31, 2016 5:05 am

I've read the government website re this subject but still unsure so any help would be greatly appreciated. My wife and I jointly bought our home in 2009 and are now selling it. In August 2015 my wife bought another house solely in her name so she could be near her mother to help care for her. We have renovated this house over the last year. Neither have ever been rented out or used for business and are under the 5k sq m size. We would like to sell both houses and buy another but are worried about CGT. We do not have to complete self assessment tax returns. My questions are;
Does she need to write to nominate our main home before the sale goes through?
Would we be better off living in her house for 18 months before selling it?
TIA

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CGT

Postby pawncob » Tue Nov 01, 2016 5:28 pm

PPR is a matter of fact. Your old house is wholly exempt and the new house is wholly chargeable, so any gain from 2015 to sale is taxable. Is there a gain, after costs?
With a pinch of salt take what I say, but don't exceed your RDA

MazzaMc
Posts:22
Joined:Mon Oct 31, 2016 4:39 am

Re: CGT

Postby MazzaMc » Wed Nov 02, 2016 7:44 pm

Thanks for your reply. So we don't need to send a letter to nominate our joint home? Yes there will be a gain on her house. Bought for £140k and should sell for about 200k, spent about 20k renovating it, new kitchen, bathroom, windows etc and doing a small extension for an en suite.

MazzaMc
Posts:22
Joined:Mon Oct 31, 2016 4:39 am

Re: CGT

Postby MazzaMc » Sat Nov 05, 2016 6:26 am

Can you tell me what rate of CGT would be payable on the gain? Is it the new 10%? Thanks

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: CGT

Postby bd6759 » Sat Nov 05, 2016 11:18 am

You need to consider whether the purchase, rennovation and sale of the house is an activity in the nature of a trade. If so, the profit will chargeable to income tax, not capital gain tax.

MazzaMc
Posts:22
Joined:Mon Oct 31, 2016 4:39 am

Re: CGT

Postby MazzaMc » Tue Nov 08, 2016 5:35 pm

The second property was bought for her to be near her elderly mother who needs a lot more care these days so not a trade.

MazzaMc
Posts:22
Joined:Mon Oct 31, 2016 4:39 am

Re: CGT

Postby MazzaMc » Sat Nov 19, 2016 9:44 am

Can anyone please tell me what rate of CGT she will have to pay?

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Re: CGT

Postby Peter D » Sat Nov 19, 2016 9:51 am

18% or 28% depending on her marginal rate of IT or of course a combination of both. It all depends on her normal income. Regards Peter

Crossleys
Posts:40
Joined:Tue Sep 28, 2010 12:23 am
Location:Hindhead, Surrey
Contact:

Re: CGT

Postby Crossleys » Fri Nov 25, 2016 8:03 pm

I'd be interested in the following -
Why is your wife selling the property?
How far is your wife's property from your main home?
Approximately how much time have you spent residing in your wife's property?
PNP Lewin FCCA
Crossleys Chartered Certified Accountants
plewin@crossleysuk.com

MazzaMc
Posts:22
Joined:Mon Oct 31, 2016 4:39 am

Re: CGT

Postby MazzaMc » Wed Dec 14, 2016 6:24 pm

Thanks for your reply Peter. 18% it is then.

The bungalow is 110 miles from our main home. We have now sold our main home, should complete around the end of Jan and will then move into hers whilst we look for something else to buy. We will sell the bungalow when we find another home we want to buy. Can we reduce our CGT by whatever % of time we only own and live in the bungalow as it will then become our main/only residence?


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