CGT liability

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    CGT liability

    I have a second property which I bought with my husband in August 2011. I started letting it after 1 month of ownership, during which time I notified HMRC that it was my primary residence.
    I paid £600k for it. It is now worth £900k. If I sell now ie November what is my Capital Gains liability assuming we're both already higher rate tax payers?

    Is it: Total gain = 300
    76 months - 19 = 57
    300/76 x 57 = 225
    225 - (2 x 40k private lettings relief) = 145
    145 x 0.28 = £40,600


    #2
    It depends on whether you had intended to occupy the property as your permanent residence rather than doing it to minimise the tax payable. HMRC might disallow a PPR claim if they feel you never intended the occupation to be permanent. Assuming they allow it, you have forgotten your personal annual allowances of £11,300.

    Comment


      #3
      How can it be your main residence if you let the property after only one month from purchase.? Have you reported the income from subletting since 2011?

      If property was registered under joint ownership, each owner has 50% share of the capital gain = £150K .

      The personal capital gains allowance at £11K may be claimed , so taxable gain on £150K-£11K = £139K .

      Tax payable on taxable capital gain of £139K @ 28% = £38K approx.

      Comment


        #4
        All the rent has been declared! My husband lost his job at the same time as we purchased it - hence the change of plan.

        Comment


          #5
          What's meant to happen is that HMRC cross refer your tax data and will see that you have been decaring rental income for your "main" residence.
          In reality, I doubt that would happen.

          Which is a shame - because, on the face of what's been posted, I imagine no CGT will be paid.
          Cyinic that I am.
          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

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