Capital gains tax on property that I shared with my partner

[gregjackson555]

Hi,

I am trying to work out how much capital gains tax I would have to pay upon the sale of my property.

-- I purchased the property for £143k in July 2014 with my ex-partner 50/50.
-- I split with my ex-partner in July 2017 and I purchased their share of the house. The sale price was £165k (although I already owned 50%, so I bought the other 50%).
-- From July 2017 I have owned the property in my sole name.
-- I am planning to sell the property in 2025 for an assumed sale price of £180k.
-- Total purchase/sale costs have been around £8k. Refurb costs have been around £5k.
-- I am single now.

How much Capital Gains tax would I have to pay?
-- Would the gain be calculated on my original purchase price £143k (although I only bought 50% of the property then) or when I bought the whole property at £165k (I then owned 100%)?

[wamstax]

Was this your sole main residence at any points in time of your ownership and what other uses was the property put to at all other times (with dates)?

[bd6759]

Your costs are what you paid.

2014 £71,500
2016 £82,500 (if that is what you paid).

Purchase cost = half of 2014 acquisition plus all of 2016 acquisition.

Enhancement costs = half if before 2016 acquisition, all if after.

[gregjackson555]

Thank you for getting back to me. Sorry i’m still a bit confused. Can you show an example calculation of how much CGT I would have to pay? I’m not sure how to work it out.

— I have never lived in the property.
— I am a 40% tax payer.

Are you saying just assume the purchase price is the average of 143k and 165k = purchase cost to me of 154k (same as 71,500 + 82,500).

Your costs are what you paid.

2014 £71,500
2016 £82,500 (if that is what you paid).

Purchase cost = half of 2014 acquisition plus all of 2016 acquisition.

Enhancement costs = half if before 2016 acquisition, all if after.

[AGoodman]

It's not an average (although it might work out the same), it's what you have actually paid for the property. Your initial question was a little unclear about that but bd6759 has assumed that you paid half the original purchase price and then half the value in 2017.

Your gain would be £180k - £154k - £8k - deductible enhancement costs

then deduct your exemption of £3k. The balance would be taxed at 24% as you're a higher rate taxpayer.

Note what bd6759 said about enhancement costs and also that it doesn't include repairs, only improvements.