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Where Taxpayers and Advisers Meet

CGT One Year Rule, I am in Shock.

ohdearme
Posts: 5
Joined: Mon May 15, 2017 12:36 pm

CGT One Year Rule, I am in Shock.

Postby ohdearme » Tue Jul 30, 2019 10:32 am

Hello All,

I bought a flat to let for £39,0000 in October 1994 and have just sold it for £440,000. I am shocked to understand that I am likely pay about £100,000 in CGT.

This money will be our only income apart from state pension.

Can this be correct? My main question is that I understand that there is a rule that if I buy another house to let within one year, there is a "roll over" or some kind of
"deferment".

Can some kind person please enlighten me and/or point me to some information?

Look forward to hearing from you.

Greetings

darthblingbling
Posts: 269
Joined: Wed Aug 02, 2017 9:09 pm

Re: CGT One Year Rule, I am in Shock.

Postby darthblingbling » Tue Jul 30, 2019 10:49 am

To clarify, you mean £39k and not £390k?

wamstax
Posts: 1869
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: CGT One Year Rule, I am in Shock.

Postby wamstax » Tue Jul 30, 2019 11:28 am

Unfortunately unless the gain is not £400k you are likely to be paying around £100k in tax with little opportunity to reduce that unless during your ownership you carried out capital improvements ( not claimed against the tax on letting income) that were reflected in the state or nature of the property when you sold it.

Appreciate your feelings on the amount of tax but let’s face it you’re still going to have about £340k left to spend
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website

AGoodman
Posts: 857
Joined: Fri May 16, 2014 3:47 pm

Re: CGT One Year Rule, I am in Shock.

Postby AGoodman » Wed Jul 31, 2019 12:14 pm

No, there is no rollover relief or anything else matching your description on investment properties.

Those reliefs only apply to the sale of business assets, such as, well, a business (or satellites).

Jholm
Posts: 103
Joined: Mon Mar 11, 2019 4:22 pm

Re: CGT One Year Rule, I am in Shock.

Postby Jholm » Wed Jul 31, 2019 12:19 pm

Can we assume that the property was only ever let (i.e. you never lived in it as your primary residence)?

Jholm
Posts: 103
Joined: Mon Mar 11, 2019 4:22 pm

Re: CGT One Year Rule, I am in Shock.

Postby Jholm » Wed Jul 31, 2019 12:20 pm

Sadly this seems another case demonstrating the value of tax advice prior to doing something rather than after.

ohdearme
Posts: 5
Joined: Mon May 15, 2017 12:36 pm

Re: CGT One Year Rule, I am in Shock.

Postby ohdearme » Fri Aug 02, 2019 1:51 pm

Thank you everyone,

Hello Darthblingbling, yes I bought it for £39,000.
Hello Jholm, The flat was only let and only lived in by tenants.
This flat was not held in a limited company
True Wamstax I still have a substantial amount, but when you are retired and no other income, it is not so big.

Nice weekend everyone

pawncob
Posts: 4352
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: CGT One Year Rule, I am in Shock.

Postby pawncob » Fri Aug 02, 2019 4:23 pm

Even worse is that you're paying CGT on £41,000 of inflation.
With a pinch of salt take what I say, but don't exceed your RDA

devon
Posts: 51
Joined: Wed Aug 06, 2008 3:14 pm

Re: CGT One Year Rule, I am in Shock.

Postby devon » Sun Aug 04, 2019 9:43 pm

By , ”Just sold it for £440,000” do you mean that the legal transfer to the new owner has actually taken place or simply that you have agreed a sale.
A property to the value of £440,000 will bring in a substantial rental income, so if the sale has not been legally completed it would be in your interest to keep the property and benefit from the rental income
In that case when you die whoever inherits the property on your death will inherit it at the full market value at the time of your death, and can sell it at the then market price without any capital gains liability.
There will be a theoretical IHT liability, but from what you say concerning your modest assets, IHT exemptions should cover the value of your estate

ohdearme
Posts: 5
Joined: Mon May 15, 2017 12:36 pm

Re: CGT One Year Rule, I am in Shock.

Postby ohdearme » Tue Aug 06, 2019 11:40 am

Hello All

Answer to one of you , the flat was only for AST tenants.

Someone said that there was no "rollover " system, I have found however, that there is a CGT deferral relief called Sections 152-160.

I am still reading and reading and reading and grateful to you all.


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