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Where Taxpayers and Advisers Meet

Capital gains on selling rented property.

wooody
Posts:5
Joined:Wed Aug 06, 2008 3:47 pm

Postby wooody » Fri Dec 29, 2006 9:53 am

My partner and I bought a house in oct 1996, lived in it until april 1997. Rented until sold feb 2006. Sold for £133,000, costs for buying and capital expenditure are £53,579. I have read IR283 but finding it difficult to work out the CGT if any.
Perhaps someone could guide me through this, many thanks.

duff
Posts:2
Joined:Wed Aug 06, 2008 3:47 pm

Postby duff » Fri Dec 29, 2006 10:34 am

My wife & I bought an appartment in 1998 for £65000. Rented it until 2003. And sold it in 2005 for £10500. What is our capital gain liability in the tax year 2005-2006.Thank you.

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Fri Dec 29, 2006 11:25 am

moonchapel,

It will depend on whether your ~ 6 month occupation will allow the house to qualify as your reidence.

If it does, the gain should be exempt from CGT.

If not, Indexation, Taper Relief and 2 x Annual Exemptions (assuming not already utilised) are able to reduce the gross gain of £79,421.

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Fri Dec 29, 2006 11:29 am

duff,

Was the appartment your (main) residence from 2003-05 (or any other time)?

wooody
Posts:5
Joined:Wed Aug 06, 2008 3:47 pm

Postby wooody » Fri Dec 29, 2006 11:38 am

Thank you King Maker,
Could you possibly show how this is worked out as a) With the residence relief, b) With gross gain of £79,421.
I am having trouble with my maths.
Many thanks.

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Postby Peter D » Fri Dec 29, 2006 12:25 pm

Duff I suggest you start your own thread and not hyjack someone eles. It also makes it easier for us to assist. You should in you new thread give eaxct dates i.e. day/month/year as 1998 was a critial year for indexation and taper relief. So supply all information in your NEW thread. Regards Peter

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

Postby Instinctive » Fri Dec 29, 2006 1:29 pm

Oct 1996 to Apr 97 = 6 months exempt as main residence.

Final 3 years exempt from Feb 2003 to Feb 2006.

This leaves the period in between from May 1997 to Feb 2003 (say 5.75 years) which is chargeable. The gain for this period is 5.75 years /9.25 years x £80,000 = £50,000.

This is reduced by lettings relief, restricted to £30,000 (equal to gain exempted due to PPR relief 3.5 years / 9.25 years x £80,000= £30,000).

The remaining £20,000 gain is reduced by taper relief of 30% = £6,000, leaving £14,000 which is covered by CGT annual allowance for you and your partner.

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

Postby Instinctive » Fri Dec 29, 2006 1:36 pm

If you do not qualify for PPR relief, the gross gains of approx £80,000 is reduced by Indexation (small - Ignore), taper 30% = £24,000, and 2 x annual CGT allowance of £8,500 = £17,000.

This leaves approx £39,000 chargeable to CGT between the two owners.

Ramnik

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Postby Peter D » Fri Dec 29, 2006 1:38 pm

£8,800 not £8,500 you really like that 8,500 figure don't you. Regards Peter

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Fri Dec 29, 2006 3:41 pm

PeterD,

The CGT Annual Exemption for 2005-06 is £8500, which applies to a disposal in Feb 2006.


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