Capital gains tax question

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    Capital gains tax question

    Hi all you cleaver people , The wife and myself wish to sell our old family house which we have owned for 22 years ,we moved out 10 months ago into a property which we bought to rent out but the wife fell in love with it so we let a very close friend live in our old house rent free ( she was on her knees with 3 small children ) but she had to pay all bills and up keep of the said property .We have been made an offer and would like to accept but we are not sure if we would have to pay Capital gains tax or not .As the value of the house is quite high its my belief this could be alot and if this is the case we would proberly keep the house and charge rent as we feel we have helped are friend enough now . The people who made the offer want us to start paper work on the sale but i hope you see are problem , Many thanks for any answers given .

    #2
    a) You have to pay CGT
    b) However it is unlikely to be a CGT charge of other than zero
    c) Above presumes you lived in it as you main and only home for 22 years, and that the same individual(s) who owned it through that period, and occupied it, is the same person(s) who will be selling it.

    Comment


      #3
      You almost certainly have 18 months after the date you moved out to complete without the CGT liability kicking in.
      You apportion any growth over the life time of your ownership with 18 months being added to the period you lived in it.

      If the person living in your property is paying the bills and keeping the property "up", she's (again almost certainly) a tenant, and has a whole shed-loads of rights.
      You will need her cooperation in moving out to sell with vacant possession.
      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


        #4
        As above. Within 18 months CGT should be zero and even after that you apportion the increase in value and you each have an annual tax free allowance (assuming that its jointly owned and you have sold nothing else liable to CGT) so likely to be zero a bit longer. If you had taken rent you could also claim letting relief but I dont know the position when she's paid upkeep but not rent.

        You need to get your friend out before starting a sale. "Close friends" losing a rent free property can become difficult - and cease to be friends rapidly.

        Comment


          #5
          Thank you all for you replys , Our friend has found somewhere else and is moving out in 4 weeks so thats all good, Again thank you it has helped more than you no .

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