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Where Taxpayers and Advisers Meet

Capital Gains

Diggler1
Posts:3
Joined:Wed Apr 20, 2022 2:30 pm
Capital Gains

Postby Diggler1 » Wed Apr 20, 2022 2:38 pm

Hi All,
My partner and I purchased a house in 1993 for £55850. In 2006 we took some equity out and turned the original mortgage into a buy to let mortgage for £92450. We are now ready to sell and my question for capital gains tax purposes is which figure will HMRC use to calculate our capital gain, £55850 or £92450. Thank you in advance if you are able to help.

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Capital Gains

Postby Jholm » Thu Apr 21, 2022 2:32 pm

Sale price, less any associated sale costs, less cost price of £55,850 and any associated acquisition costs.

Also deduct any capital enhancements such as extensions, if relevant.

Mortgage is n/a.

This assumes you never lived in it and are liable to CGT in full with no relief.

Diggler1
Posts:3
Joined:Wed Apr 20, 2022 2:30 pm

Re: Capital Gains

Postby Diggler1 » Thu Apr 21, 2022 5:21 pm

We lived in the house for 13 years 4 months so are we eligible for partial private letting relief. If we sell the house for £220000 what would the capital gain payable be. My wife is a higher taxpayer and I am a lower rate taxpayer. I know the formula but keep coming up with different figures. Thanx again for any replies.

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Capital Gains

Postby robbob » Fri Apr 22, 2022 12:13 pm

Are you getting letting relief mixed up with Private Residence Relief

You would only get letting relief now (rules changed 2020) if you lived in house at same time as your tenants which is very unlikley

Thankfully you will qualify for private resience relief for % of time that you lived in the house plus 9 months on top if you did not live in house for the final 9 months of ownership.
So your gain will be reduced by over 50% if it was yyour main residence for over half the time you owned that property.
Possible you could get extra relief if reasons for not living there are one of the brucie bonus reasons that grant additional extra relief.

Complicated set of rules so my post may miss something important if your circumstances are quirky

https://www.gov.uk/tax-sell-home/let-out-part-of-home
Claim Letting Relief
If you lived in your home at the same time as your tenants, you may qualify for Letting Relief on gains you make when you sell the property.

You can get the lowest of the following:

the same amount you got in Private Residence Relief
£40,000
the same amount as the chargeable gain you made while letting out part of your home
Letting Relief does not cover any proportion of the chargeable gain you make while your home is empty.

Diggler1
Posts:3
Joined:Wed Apr 20, 2022 2:30 pm

Re: Capital Gains

Postby Diggler1 » Fri Apr 22, 2022 12:21 pm

Sorry I meant are we eligible for partial private letting relief. As I say I know the formula but keep coming up with different amounts on calculator. Your replies are much appreciated.

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

Re: Capital Gains

Postby bd6759 » Fri Apr 22, 2022 1:43 pm

Letting relief has been abolished, so you are not eligible.

If you know the formula, you have a calculator problem if you keep coming up with different results.

Why not share your formula and calculation?


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