sale of ex residential property

[charlton]

i am thinking of selling my old house that i have rented since sept 03, my husband bought the house in feb 1988, and ibecome a joint owner with him in 1994, where we both lived until 2003 how much cgt would we be liable for.

[King_Maker]

As the property has been your PPR at some time, then the last 3 years of OWNERSHIP are exempt from CGT - so it seems that only about 17 months is not fully covered by the Exemption.

Lettings Relief and Taper Relief may effectively extend the Nil CGT liability beyond the (final) 3 year exemption period.


Have you read the Inland Revenue's Help Sheet IR283 which deals with CGT for private residences?

It is downloadable from their website.

http://www.hmrc.gov.uk/helpsheets/ir283.pdf


[CAVEAT : see Matthew Hutton's article of August 2005 where Lettings Relief falls within last 3 years of ownership :

http://www.taxationweb.co.uk/articles/a ... php?id=215 ]

[Peter D]

I assume you have reported the Rental profit to HMRC and you both have 50% income from the Profit decalred on your annual SA. If this is not the case then Lettings Relief will not apply and you have a problem with un declared Income and therefore Tax and HMRC. If you provide the aquisition and potential sale price of the property and estimated legal fees for both the purchase and the sale I can evaluated the size of the problem. Regards Peter

[charlton]

Dear Peter,
I have declared the rental income since 2003, but in my name only, as this is what my accountant has done, as my husband has a number of other propertys in his name that he lets out .(you have me worried now).my husband paid 72 k for the house we now think that we can sell it for around 320k we have remortgaged it and have 150k on mortgage .
i would estimate to sell the house will cost between 5-7 k .

[Peter D]

You made have a 'Deed or Trust' in place that appoints all the income to you so do a bit more homework. As you have detected I read between the lines of your original posting and thus the IR question. However that asside what about CGT, Well I need the date you started to rent it and I'll run the numbers. Regards Peter

[charlton]

Dear Peter,
I rented the house out on the 10-09-2003, to this presant date.(current tenancy due to expire 28-06-07)
would i be correct in thinking that i will need to go and see my solicter so a deed or trust can be drawn up asap .

[King_Maker]

A "Deed of Trust" will not, of itself, assist - and I suspect it may be lacking.

The rental profit should have been split 50:50, unless a Form 17 was lodged within 60 days with HMRC stating the split of the beneficial ownership. You should check this point with your accountant asap.

[charlton]

yes you are correct a deed of trust is lacking as i was not advised of this , and i have a funny feeling that a Form 17 has not been submitted as it has never been mentioned , what are the implications now when we sell the house .
many thanks for all this information .

[CDavey9501@aol.com]

There seems to be little if any CGT to worry about.

Strictly, your husband should have declared his share of the rental profits. You may have oversated your income. Ask your accountant to crunch the numbers. There may not be too much additional tax to pay. Making a revision to the tax returns to correct these erros should be possible.

[King_Maker]

The CGT position needs clarifying.

I had assumed the house was your husband's only or main residence from 1988 to 2003, and your only/main residence from 1994 to 2003. Is this correct?

For the income tax, I suspect that your husband may be a higher taxpayer than you - hence this unequal profit split?

If so, (and assuming a partnership does not exist), you may be due a tax refund, and your husband a tax bill with interest (and possible penalties) - the latter being higher than the former, I fear.

But you need to contact your accountant - only he/she can explain his/her actions.