CGT on future sale of previous home

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    CGT on future sale of previous home

    Your advice please.

    My home is mortgage free and am looking to purchase another house to move into, taking some of the equity from current home as deposit for new home. Current home was purchased in Jan 2001.

    Question
    1. When the 1st house is eventually sold, is the CGT based from the Jan 2001 purchase transaction value or the value when we purchased the new home and let the current house?
    2. Is there a time restriction as to when the Let to Buy property should be sold to minimize CGT?
    3. How is the CGT calculated, the purchase price in 2001 was 200K, now it valued at 480K

    Thanks in advance

    #2
    The CGT is apportioned.

    So the gain would be the difference between the sale value and the purchase price.
    The taxable gain is the entire gain times (the number of days when the property wasn't your main residence plus 18 months) divided by the number of days you owned it.

    So if you owned it for ten years and lived in it for four and a half with £100k gain, your taxable gain is £100k * (1460 [10 years less 4.5 + 1.5 years)] / 3650 [10 years].

    So £40k is taxable.
    And obviously that's a back of a fag packet version.

    So if you sell within 18 months there's no tax at all.

    You are also entitled to letting relief which will reduce the bill further.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      If your house has been owner-occupied since Jan 2001 and you move out at end of month , the entire period plus 18 months from moving out ( up to May 2019 ) is exempt for capital gains tax . You have capital gains over 18 years period of £280K ( £480 less £200K ) and this is fully exempt for cgt.

      If you rent out the property and sold in Jan 2025 and achieved 360K in capital gains over 24 years period , then approx one quarter of the capital gains = £90K is liable for cgt. but you can deduct lettings relief up to £40K + personal cgt allowance £11K .

      So you would pay tax on the chargeable capital gains : £90K- £40K -£11K =£39K @ 28% = £11K tax bill.

      But you should consult a tax accountant before you decide as the calculation given here in a forum may not be correct.

      Comment


        #4
        If you can kindly give us the CGT rules and regulations for when you will sell an accurate answer may be tried. Otherwise, guesses.
        I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

        Comment


          #5
          Yes, after Brexit negotiations have been concluded in 2019 , the tax rules may be changed. So yes , I am guessing .

          Comment


            #6
            Sorry, not aiming at anyone in particular: Rules could change with the Budget 22nd November.

            I admire your confidence with your 2019 prediction for conclusion of negotiations!
            I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

            Comment

            Latest Activity

            Collapse

            • Reply to Giving/Gifting House to Kids
              by jpucng62
              If they are left with a house bought 50 years ago and nothing else it certainly hasn't been a financially productive life has it? Either they have earned very little or spent quite a lot. Seems a bit odd to then think there would be anything left for the kids after either scenario....
              12-08-2022, 16:55 PM
            • Giving/Gifting House to Kids
              by Tony-Edwards
              Elderly parents in early 80s, one in not so good health.

              Lived in the same home (no mortgage etc) for 50+ years - now worth approx £180,000 - £200,000 and they have minimal savings.

              Looking ahead, if one has to go into care (or council provided home care) I understand there...
              11-08-2022, 11:12 AM
            • Reply to Giving/Gifting House to Kids
              by Tony-Edwards
              Ha-Ha don't try and deflect it back to me.

              I posted a scenario with info to ask for peoples views - yet you chose to go on the attack lol...
              12-08-2022, 15:25 PM
            • Reply to Giving/Gifting House to Kids
              by gnvqsos
              The house is being exchanged for the provision of care .Why should the family inherit the house, benefit from a windfall, and expect others to fund their parental care? The family could fund the care and then house could be inherited as and when the parents pass on.. There is also equity release as...
              12-08-2022, 14:15 PM
            • Reply to Giving/Gifting House to Kids
              by Neelix
              Then why are you getting involved?...
              12-08-2022, 13:58 PM
            • Reply to Giving/Gifting House to Kids
              by Tony-Edwards
              Ah how sweet - and clearly you CANNOT READ !!!!!

              As previously stated - quite clearly I thought - " (BTW they're not my parents or kids) "...
              12-08-2022, 13:37 PM
            • Reply to Giving/Gifting House to Kids
              by Hollywood
              I'm not even sure the £86000 lifetime limit has come into being yet. I also think the care home fees have to have the personal care cost element removed.
              12-08-2022, 12:48 PM
            • Reply to Giving/Gifting House to Kids
              by jpucng62
              Two points:

              1. Why should the tax payer pick up the bill for the parents care if they have assets? I really don't understand this point of view.

              2. I would rather pay for my care and get a choice than rely on the Council & get possible a worse standard of care.
              12-08-2022, 09:53 AM
            • Reply to Giving/Gifting House to Kids
              by royw
              I'm not quite quite sure why you think they are being robbed? They have assets so can afford to pay for themselves. I would consider the council tax payers - many of whom can only dream of owning their own home - to have been robbed if they have to pay for it.
              Totally agree about those who could...
              11-08-2022, 22:45 PM
            • Reply to SDLT relief for multiple dwellings
              by BIGGYBIBIG
              It would seem there is nobody with any knowledge on here, which is strange as i would have thought many people would have purchased blocks of flats and even if they did pay the wrong stamp duty by mistake as they did not know , HMRC do give you a one year window from completion to claim it back
              ...
              11-08-2022, 18:52 PM
            Working...
            X