Capital Gains Calculation

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

    Capital Gains Calculation

    Hi Everyone,
    I'm new here and hope you can help me calculate how much CGT my husband and I need to pay. I am at a loss trying to work it out. We bought a house in Oct88 and lived there until we downsized and completion was in Mar15 and we moved in around May. We kept our first house and our two sons lived at the property rent free. We covered all bills until Nov20 when we decided to sell. We put it with an estate agent and one son decided to buy the property. I paid the agent and we finally completed on 1st June 2021. We originally bought for £53,500 and sold for 230k at market value. I have calculated the gain as £176500 and divided by 2 making our gain 88,250 each. It's the next calculation where i'm stuck. I have worked out our losses at £2139 each. My occupational pension is only £1936 a year so do not pay tax and my husband has an income of £20296 which is his state pension and occupational pension combined. In all, I think we can possibly get Private Residence Relief for 26 years and 6 months (Oct88-End of April) plus 9 months. I feel stupid as I cannot work out the fraction to work out how much we each owe. I am worried sick about this and I don't know whether to get an accountant or do it myself online. Sorry for the long post but would be most grateful if someone could advise how much will be due. Thank you.

    #2
    You probably want to do the calculation by the exact number of days, but in months it's...

    You owned the property for 392 months, living in it for 319 and not living in it for 73 months.
    As you say for Residential Relief you add 9 months to the time spent living there and take the same amount from the taxable period.
    So the months for tax are then 328 and 64.

    Divide £176,500 by 392, and you get about £450 gain each month.

    So the taxable gain is about 28,800 and the non-taxable gain is about £147,600.
    Half the taxable gain is 14,400 and the tax free annual allowance for each of you is £12,300.

    So you'll pay tax on a gain of £2,100 which should be less than £400 in tax each.

    I've done some of that in my head, so you might want to check out my maths!
    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
      J P Keats- Thank you so much for your help and fast reply. You are fantastic doing that working out for me, especially in your head. I cannot thank you enough. I'm still not sure about doing it myself online because I think I will make a total mess of it. I did try to work it out, and it came to thousands. You taking the time to do the maths is very much appreciated by both of us. Thank you.

      Comment


        #4
        When you declare online to HMRC (within 30 days ) the system calculates CGT for you. Must also be paid within the 30 days.
        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
          Thank you Artfulllodger, yes i'm aware of the 30 days but thanks for the advice anyway. I tried using the online HMRC system calculator but I seemed to go wrong once I got to the PRR bit. I was also wary as i'm not confident, of putting in the wrong information. Can you tell me if it calculates without having to press confirm, and when confirmed can you pay straight away?.J P Keats has been so helpful giving me an idea of the figure. I'm grateful to you for taking the time to reply.

          Comment


            #6
            Given the size of the gain, why not pay an accountant to do the return?
            It will probably cost more than the tax due, but there's only so much stress a person can manage - and this sounds like a one off, so it's not as if the experience will benefit you in the future.
            And the accountant might find some savings somewhere.
            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


              #7
              Thanks JPKeats, I have taken your advice and contacted an accountant. They have said they will go through the form online with me and also fill in a tax return which should be a one off. I feel relieved to know that it will all be dealt with correctly. Thank you for your time and for reassuring me. It is much appreciated.

              Comment


                #8
                Good to know you're feeling less stressed and thanks for letting us know the outcome!
                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


                  #9
                  I will come back and let you know how I get on with the accountant. Have a nice evening.

                  Comment

                  Latest Activity

                  Collapse

                  • Reply to Expenses off-set against income tax
                    by xenoid
                    Indeed its a capital repayment mortgage at 3.09% (very high i know) .. not many lenders will to remortgage for overseas BTL at a good rate.. value of property is £330 000 and Rent £1250 increasing to £12750 in august... still not good enough for expenses. So I will sell the property.
                    recent...
                    29-07-2021, 11:44 AM
                  • Expenses off-set against income tax
                    by xenoid
                    Hi All, I have a question that might have been asked but could find it here.. I am an overseas landlord with only one buy-to let property in the UK. My monthly expenses are more than the rental income so on an annual basis I make a loss. I understand that these expenses can be claimed against tax and...
                    27-07-2021, 12:54 PM
                  • Reply to Expenses off-set against income tax
                    by g373
                    Yes, sell up....
                    29-07-2021, 10:25 AM
                  • Reply to Expenses off-set against income tax
                    by jpkeates
                    If the maintenance, insurance, certificates and other stuff is costing more than £4.5k per annum you should probably sell the property.
                    That mortgage is ludicrous for a BTL, unless the value of the property and the market rent are completely out of whack or it's not interest only.
                    29-07-2021, 09:07 AM
                  • Reply to Expenses off-set against income tax
                    by xenoid
                    monthly rent 1250 ... buy-to let mortgage 873.12 - certificates (elec, gas, PAT, Fire and risk, EPC), maintenance and repairs, council landlord licence costs, service charges, landlord insurance.... all of these quickly erode the rental income.. mortgage is high since is an overseas Buy to let mortgage......
                    29-07-2021, 08:24 AM
                  • Reply to SPV and Leases
                    by jpkeates
                    There isn't really a black and white answer to the question, which I think if because there's a shed load of information missing.

                    If your husband is retiring from being a director of a company, there's no need for anything else to happen - so I suspect that he wants to exit an existing...
                    29-07-2021, 08:18 AM
                  • SPV and Leases
                    by Thurrock1
                    My husband is one of three directors of a limited property development company that has converted a house to 3 flats. The flats are currently rented. Please can someone tell me if, in order to get leases on the flats, we have to at the same time put them into an SPV. To put them into an SPV will...
                    28-07-2021, 20:38 PM
                  • Reply to Expenses off-set against income tax
                    by jpkeates
                    I can easily imagine that a couple of costly repairs might knock a property into a short term loss, but a rental property let out at a rent that doesn't cover the basic costs of operating it long term sounds very odd indeed.

                    How on earth can that happen?...
                    29-07-2021, 08:13 AM
                  • Reply to Expenses off-set against income tax
                    by Neelix
                    How many years have you been running at a loss?
                    29-07-2021, 07:16 AM
                  • Reply to Expenses off-set against income tax
                    by AndrewDod
                    Sounds like a great investment. HMRC will definitely be exploring those expenses in due course....
                    28-07-2021, 20:45 PM
                  Working...
                  X