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

CGT, am I liable. Can anyone please help?

jumbo5276
Posts:4
Joined:Wed Aug 06, 2008 3:24 pm

Postby jumbo5276 » Thu Apr 21, 2005 4:39 am

My daughter has just informed me (after watching a TV programme), that I could be liable for capital gains tax if I sell my house, which I want to do asap.

I moved into my council accommodation in November 1999, during my divorce. I bought the property (on the right to buy scheme) in July 2002 by this time my daughter and partner were living there too. In August 2003 I moved in with my partner, who owns her home. My daughter remained in the property, rent free, up until July 2004! Since her vacation the property has been empty but I now continue to pay the associated bills, I had 6 months exemption from council tax and now pay reduced council tax. I canÂ’t sell the property until July 2005 (council 3 year time bar). The property has also remained empty from July 2004 to date. My partner and I are not yet married.
We had eventually hoped to sell both properties and buy a new home together with room for our family. The house in question is a two bed, the one my partner owns and we live in, is a 3 bed. There are 6 of us.

D Sum
Posts:10
Joined:Wed Aug 06, 2008 3:12 pm

Postby D Sum » Thu Apr 21, 2005 4:47 am

Hi "Jumbo"

From the information supplied it seems that the property qualifies as your principal private residence, which basically allows you to claim relief against capital gains tax for the periods you resided at the property. However, there is a rule which also extends the relief for the last 36 months of ownership.

Therefore, without evidence to the contrary and going into a long process of calculations, you will not have to pay Capital Gains Tax on the Sale of the house because it is your principal private residence and you have owned it for less than 3 years.

Kind regards


Darren Sum

D Sum
Posts:10
Joined:Wed Aug 06, 2008 3:12 pm

Postby D Sum » Thu Apr 21, 2005 4:49 am

PS - your daughter was probrably watching "property ladder" or a property developers programme which talks about tax, because the people who develop to sell are not exempt from CGT because it is not their Prinicipal Private Residence and are investing to make a gain.

jumbo5276
Posts:4
Joined:Wed Aug 06, 2008 3:24 pm

Postby jumbo5276 » Thu Apr 21, 2005 5:06 am

Thank you Darren your help is appreciated.

If when I put the house on the market a sale doesnÂ’t happen before the 3 years is up, would I be liable for a %age of CGT or would my time living there cancel this out.

Instinctive
Posts:1797
Joined:Wed Aug 06, 2008 3:15 pm

Postby Instinctive » Fri Apr 22, 2005 12:53 pm

You moved out in August 2003 and therefore you are exempted until August 2006. It is only the excess period beond August 2006 which will be chargeable to CGT. However, you will have taper relief, annual exemption (and also possibly lettings relief) to reduce or even cancel out any chargeable gains.

Ramnik

jumbo5276
Posts:4
Joined:Wed Aug 06, 2008 3:24 pm

Postby jumbo5276 » Fri Apr 22, 2005 2:40 pm

Thank you Ramnik.
I am Jumbo's partner and I notice a mistake has been made as regards his moving in with me, this should read August 2002 not August 2003.We both proof read it too!
Jumbo applied to buy his council house in November 2001 and received right to buy offer on the 5th of Feb ( this is on record)which was taken up within days there was trouble obtaining a mortagage at first as one payment had been missed during divorce then the council dragged out the rest due to people not being there. I don't know if this will help the situation.
As it is he will only have one month as living and owning the property. It is a worry that only this month will count even though he lived in the house as a council tennant before that for 2 and a half years.
We have read a little on lettings relief but as Jumbo's daughter did not pay rent we did not think this would count.
Bottom line is we need to get the max we can for the house or if needs must, squeeze the six of us in to it for as short as time possible and sell my house.
Will a visit to a solicitor give us a guarenteed answer so we know which direction to go in?

Many thanks in advance,
Mandy.

Instinctive
Posts:1797
Joined:Wed Aug 06, 2008 3:15 pm

Postby Instinctive » Tue Apr 26, 2005 10:56 am

It appears to me that the one month of occupation will be sufficient to establish only or main residence in view of the continuity of residence previously as council tenant.

If so, you will automatically be exempted for the final 3 years ownership. Therefore, you will be exempted for 1 month + 36 months = total of 37 months, ie effectively upto August 2005. Any excess period after August 2005 will be considered chargeable but subject to relief for taper relief and annual exemption.

Ramnik

peterR1
Posts:1
Joined:Wed Aug 06, 2008 3:34 pm

Postby peterR1 » Fri Feb 17, 2006 2:37 pm

Hi Mandy/jumbo

Did you have to pay any CGT? how did it work out.....I am trying to sell too.

jumbo5276
Posts:4
Joined:Wed Aug 06, 2008 3:24 pm

Postby jumbo5276 » Fri Feb 17, 2006 5:46 pm

Hi there peterR1.
Well it's been a while and our first sale fell through though were not quite sure why. The estate agent kept telling us everything was going through OK but our solicitor had a different view on matters. In the end we gave an ultimatum and eventually waited our time out with the estate agents after giving them some home truths (which fell on deaf ears but we made our point!). Consequently we put the house back on the market and finally completed this Wednesday 15th Feb with Wales and West, Hoorah! So as it is we are just going through our finances. I don't know if we will have to pay anything back it hadn't even thought about it, until now! but time will tell. Sorry if I have waffled but we have just had a tipple to celebrate the fact that we have paid a good lump of the mortgage off of our home and with 4 kids it's made a hugh difference. It's nice to have been reminded of the site as to be honest when the computer was cleaned up this site amongst many others was lost. I've re-added it to my favourites and if we do get any information further down the line we shall post on here. Good luck with your own sale, Mandy.


Return to “Capital Gains Tax, CGT”