This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Capital Gains Tax property

St86
Posts:3
Joined:Thu Jun 02, 2022 1:38 pm
Capital Gains Tax property

Postby St86 » Thu Jun 02, 2022 1:48 pm

Hi All,

Question on capital gains tax on property.lucky enough to have 2 homes. Home 1 is main residence lived in for 20 years home 2 is rented for 1 year looking at switching so we live in house 2 and rent house 1.

When we come to sell house 1 if we have moved into house 2 do we pay Capital gains on house 1 and if so how do we calculate this for example we live in house 2 for 2 years and rent out house 1 for 2 years. Also if we nominate are current house 1 as main residency would this help?

Sorry for the long question

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

Re: Capital Gains Tax property

Postby pawncob » Thu Jun 02, 2022 7:27 pm

Gain is time apportioned, so 2/22 of the gain (plus 9 months) would be chargeable.
With a pinch of salt take what I say, but don't exceed your RDA

St86
Posts:3
Joined:Thu Jun 02, 2022 1:38 pm

Re: Capital Gains Tax property

Postby St86 » Thu Jun 02, 2022 8:14 pm

Ok just trying to figure out if the profit from the house is say 250k and it's been lived in for 20 years and than rented for 2 years what amount would you pay Capital Gains tax on?

Thanks
ST

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Capital Gains Tax property

Postby AGoodman » Mon Jun 06, 2022 11:50 am

I think pawncob may have meant to say that 2/22 (minus 9 months) would be chargeable [rather than plus 9 months]

In your example, the gain would be (24-9)/(12*20)*250 = £15,625

You then deduct your annual exemption and pay 18/28% tax on the balance. Assuming you dont have other gains for the year, your tax is between £600-£900

strawn
Posts:96
Joined:Fri Jun 01, 2012 10:11 am

Re: Capital Gains Tax property

Postby strawn » Mon Jun 06, 2022 9:02 pm

I think pawncob may have meant to say that 2/22 (minus 9 months) would be chargeable [rather than plus 9 months]

In your example, the gain would be (24-9)/(12*20)*250 = £15,625

You then deduct your annual exemption and pay 18/28% tax on the balance. Assuming you dont have other gains for the year, your tax is between £600-£900
Presumably if "we" is a couple who own the house jointly then the £15,625 is halved for each of them. So if they have no other taxable capital gains in that tax year they should escape CGT altogether.

St86
Posts:3
Joined:Thu Jun 02, 2022 1:38 pm

Re: Capital Gains Tax property

Postby St86 » Mon Jun 06, 2022 9:21 pm

Hi All,

Thanks for the replies that all seems a whole lot clearer now.

I also read about nominating a house as main residency I would presume this would be null and void if we chose to than rent that out?

Thanks
ST


Return to “Capital Gains Tax, CGT”