Hi all,
This will probably be a bit incoherent so apologies in advance.
A friend of mine has asked me to work out her CGT liability for a flat she is selling. The bare facts are these:
She bought the flat in May 2000 at a purchase price of £78,000. The completion statement indicates £79,800 was paid including stamp duty, solicitor's fees, searches etc.
She lived there til August 2004 and since then has rented it out continually from August 2004 til June 2021.
The flat is currently under offer at £242,000 and estate agent & solicitor's fees should be around £4,000. She expects the sale to complete by the end of October.
From this data I calculate that the taxable Capital Gain will be £238,000 - 79800 = £158,200 x 0.8 (I get the 0.8 figure by dividing the length of time the flat was let by length of ownership.) = £126,560.
The lady in question does not expect to get much other income this financial year. Perhaps a maximum of £5,000 only.
Therefore I calculate the tax payable as:
£12,300 free of tax (Capital gains allowance)
£7,570 free of tax (residual personal allowance)
£37,701 taxed at 18% = £6,786
£68,989 taxed at 28% = £19,317.
So total CGT would be £26,102.
I am sure I will have made some errors - or maybe omitted some allowances - here, so I (and she) would welcome any comments which may clarify the situation.
Thanks all,
Chris.
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