I didn't realise until this afternoon that letting relief was banned last year. I bought the flat in late 1980s for approximately £40k. I lived there for 6 years and then moved to my present property, The flat next door sold for £180k 2 years ago. If the flat is now worth £200k, what will the cgt be if my employee income is £22k? The flat isn't well done up eg - the windows need replaced; original ones still there. Can cgt be reduced if I replace the windows? But thinking about it, this would increase the value even more. Can I add my kids names as joint owners to make use of the capital gains allowance X 3 (myself + 2 kids)?
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What date would the sale be please & what will the CGT rules be then?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... -
My daughter is a care worker but wants to go to uni to do a nursing degree. Because of her experience, she can do it in 3 years. Son is finishing uni and will will working for a housing association. As a guestimate, it would be November 2024 but if it made money sense, I'd do it sooner.Comment
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If you transfer ownership to your children without some kind of trust arrangement, it will be a CGT tax event anyway, so the CGT would be due then.
Any costs that materially affect the value of the property could be offset against the gain, but replacement windows aren't likely to be 100% q capital event, there's more than an element of maintenance.
It would depend on when in the late 80s the purchase happened.
Say there's 32 years of gain, 6 plus 9 months is tax free, so 25 and a bit years is taxable, about 126,500.
Somewhere in the mid to high 20s in tax.
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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Thanks for replies, very much appreciatedComment
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If you make a total capital gain of say £190K- £40K = £150K and have owned the flat for 32 years and lived in the property for 6 years ,
Your taxable capital gain during letting period is approx £150K x 25 /32 = £117K.
You can claim the personal capital gains of £12,500 and pay tax on £104,500.
Based on £22K job income , £28K is taxed at 18% and £76,500 at 28% = £5040 K + £21,420 = £26,500.Comment
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