capital gains tax

[johannab]

Hello , its been a while since I've posted and I appreciate help and have donated.

 

I have a flat in east london that I am thinking of selling. I don't live in it but have done over the years.

I now live in my husbands house. I bought the flat when I was single.

 

Bought 70k 2001

Currently owe on mortgage 120k

selling price up to 300k

 

I lived in it alone from 2001- 2003.

 

It was a rental property (tax paid) 2003-2008

 

our main residence 2008-2013

 

Rental property 2013- present

 

Does anyone have any idea what kind of money I owe if I sell it? Is it worth it or have I blown my profits by renting it out so much?

 

thanks

[hacksaw]

You will need to calculate periods of residence on a monthly basis.

If the property was your Principal Private Residence (PPR) at some time, then the last 36 months will be deemed to be a period of residence.

You will then need to apportion the period of residence/ownership. I assume that the garden is smaller than half a hectare and that there is no business use (letting is not generally considered business use).

There may be also be deemed residence, but that will depend on your circumstances.

Note that Husband and wife can only have one PPR between them.

You may also deduct improvements you made to the property from your chargeable gains, but not the amount you owe on the mortgage. So to give you an example:

 

 

Sale Proceeds 300,000

Acquisition cost (70,000)

230,000

PPR Exemption (155,056)

74,944

Letting relief (40,000)

34,944

Annual Exemption (11,100)

Taxable 23,844

 

 

Capital Gains Tax Rate: starts at 18% and is 28% for higher rate (so a maximum of £6,676.72 based on the above example).

 

 

PPR Exemption:

(note this is not exact: you will need to use a monthly basis based on exact dates. Your dates are assumed to be on 1 January)

 

 

Actual residence:

1.1.2001 - 31.12.2002: 24 months

1.1.2008 - 31.12.2012: 60 months

Plus Last 36 months

Total: 120 months

 

 

Length of ownership: 1.1.2001 - 31.10.2015 (assumed sale date): 178 months

 

 

120/178 x £230,000 = £155,056