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Where Taxpayers and Advisers Meet

trying to work out how much CGT ( if any ) is owed.

ecosse
Posts:2
Joined:Fri Jun 18, 2021 1:09 pm
trying to work out how much CGT ( if any ) is owed.

Postby ecosse » Fri Jun 18, 2021 1:50 pm

hello ,

I inherited 50% of a property in May 2020, my partner and I then proceeded to buy the other 50% for 65000 ( property valued @135000, sale completed Sept 2020, both our names on the title deeds )
We then spent around 20000 renovating the property ( it was not in a condition for sale ) and have today accepted an offer for the sale @220000.

my fag packet calculations is that the profit would be .. 66000 ( 33000 each )

sale price 220000
minus 65000 (original inheritance)
minus 20000 ( renovation costs )
minus. 4000 ( council tax / selling fees )
minus. 65000 ( load to buy out the 50% )



I just wanted to sanity check my thinking and see if there was anything I was missing or way to claim relief on the CGT ?

we are also looking to sell our main home and buy a larger property in the next year if somehow reinvesting the profit would help reduce CGT .

any and all advise welcomed

thanks

Samson22
Posts:52
Joined:Mon Aug 17, 2020 10:54 am

Re: trying to work out how much CGT ( if any ) is owed.

Postby Samson22 » Fri Jun 18, 2021 8:59 pm

I would wait for better minds than I.

That said as you have owned so little time and renovated might make it treated it as property development so would be income tax rather than cgt. But as it was not 100% purchased (it was partially I inherited) that may still swing it towards cgt.

So like I said wait for better minds to come along

Best wishes

ecosse
Posts:2
Joined:Fri Jun 18, 2021 1:09 pm

Re: trying to work out how much CGT ( if any ) is owed.

Postby ecosse » Tue Jun 22, 2021 11:45 am

I would wait for better minds than I.

That said as you have owned so little time and renovated might make it treated it as property development so would be income tax rather than cgt. But as it was not 100% purchased (it was partially I inherited) that may still swing it towards cgt.

So like I said wait for better minds to come along

Best wishes
thanks

someone
Posts:489
Joined:Mon Feb 13, 2017 10:09 am

Re: trying to work out how much CGT ( if any ) is owed.

Postby someone » Thu Jun 24, 2021 9:12 am

I'm pretty sure council tax won't count as a capital expense so won't be allowed as a deduction if you're assessed to CGT.

The 20K in renovations, you'll need to be careful that they all count as capital costs too. Given that you've spent 20K and increased the value by 85K it's probably reasonable to assume that they were but, unfortunately, knowing what is deemed capital expense and what is revenue is down to knowledge rather than common sense.

This article shows what a minefield it is:
https://www.taxinsider.co.uk/capital-verses-revenue-how-to-offset-expenses-ta

However that's looking at it from the PoV of a landlord who wants as much as possible to count as revenue rather than capital so I'm not sure if "new kitchen" can also be capital or whether it's always revenue.


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