Need CGT help or do i ned an accountant

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    Need CGT help or do i ned an accountant

    Mother died in 2007 left house to me and my 2 sibs it was family home and i lived in it until 1985 when i had my own house. My brother also lived in house at point mum died and he remained there until 2010 when not being able to sell the property i purchased whole of property by buying brother and sister out along with my husband so it was owned jointly. Husband died 2012 so house registed in my sole name at that point. House valuation in 2010 was £140,000 sale conducted through solicitors who dealt with my mothers estate. I then had house rewired, new boiler and central heating system installed and bathroom converted back to family bathroom from disabled adaption done by council for my mother. I had to decorate throughout due to mess left from renovations. House was then rented out by me until this year although i didnt get any rent from tennant since Sept 2019, she refused to pay and i only manged to evict her in April 2021 using bailiffs. I have a buyer at £223,000.

    i know i can set some things off against CGT eg, capital expenses which i think should jnclude rewiring of house, new bathroom and complete central heating system and combi boiler. I also had the garage demolished as it had an asbestos roof and replaced wooden structure with new concrete one which i think is a capital expense. I think i can also set off the expense of purchasing the house and also selling the house. Can i also offset the legal costs for the eviction of tennant and the court and baillif.

    i also want to know if there is anything I can claim in terms of the house having been my family home where i lived with my siblings from 1970 onwards. Sorry its such a long question and totally understand if you think i would benefit from employing an accountant to sort out the calculation for me. I complete my tax return on line with HMRC for the rental although there has been no gain since tenant stopped paying rent just expenses that i have to pay. Do i just declare the CG on self assessment return.


    #2
    The CGT calculation is only for the duration of property ownership from 2010 to 2021. You moved out from the house in 1985 , so you cannot claim any residence period in family home.

    Your Capital Gain = Sale proceeds - Purchase cost in 2010 - Renovation cost - Legal costs ( conveyancing + eviction costs ).

    The self assessment return is for declaring the annual rental income and expenses .

    I believe there is a separate form for reporting capital gains.

    Comment


      #3
      Thanks for taking the time to answer. I am pleased i can set eviction costs against it. I have now found the separate form to fill in. Many thanks hopefully i can do this without an accountant.

      Comment


        #4
        I don't believe that the eviction costs are allowable against CGT.
        They're an operating expense, not a capital expense.

        Legal costs associated with the actual purchase and sale are allowable against CGT.
        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


          #5
          For what it would cost (£150 - £200) you could get a Specialist Tax Accountant to look at it for you. Unless I am mistaken the payment of CGT has changed, you no longer do it on your Self Assessment form, you have 30 days after the sale to pay the CGT.
          PS, If there was a substantial gap between you buying it at £140,000 and renting it out in 2019 it could have increased in value to £200,000 And that could be the "start" figure for working out the CGT.
          I was once advised if I put the house I live in up for rent I should get it valued by 2 different Estate Agents to "fix" the "start" price for CGT.

          Comment


            #6
            Unfortunately i rented it out in 2010. My tenant stopped paying rent in 2019. When i purchased the property for 140,000 it was valued by 3 Estate Agents at that time ranging from 140,000 to 15,000. I presumed i had to use the actual amount i purchased the house for.

            Comment


              #7
              I believe the rental business ended in Sept 2019 when the tenant stopped paying the rent.

              So all subsequent payments on the property must be charged as expense to the sales proceeds.

              Comment


                #8
                Originally posted by Piffy View Post
                PS, If there was a substantial gap between you buying it at £140,000 and renting it out in 2019 it could have increased in value to £200,000 And that could be the "start" figure for working out the CGT.
                I was once advised if I put the house I live in up for rent I should get it valued by 2 different Estate Agents to "fix" the "start" price for CGT.
                Whoever gave you that advice doesn't understand how CGT works.
                You straight line the increase between purchase and disposal and you can deduct any time the property was your main residence (plus some additional months) as that period's gain is tax free.

                Any valuation when you start letting it out having previously lived there is academic.

                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
                  Originally posted by Gordon999 View Post
                  I believe the rental business ended in Sept 2019 when the tenant stopped paying the rent.

                  So all subsequent payments on the property must be charged as expense to the sales proceeds.
                  Surely the business continued (the rent was still owed, even if not paid) and the business continued until the disposal of the property (assuming it was the only property in the business).

                  Your interpretation is more appealing if it can be justified.
                  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


                    #10
                    If you do not inform the Tax Office and just move back to live in the BTL property, the "rental business with tax losses" , can remain in existence for three years.

                    https://www.property-tax-portal.co.u...business.shtml

                    But the property owner can notify the Tax Office that the rental business was terminated after last tenant stopped paying rent .

                    Comment


                      #11
                      I fail to see how i can notify hmrc that rental was terminated in 2019 whilt non paying tenant remained in the property until May 21

                      Comment


                        #12
                        I suggest you send a letter by recorder delivery :

                        Tax Ref: xxxxx xxxxx

                        Dear Tax Inspector,

                        I am the owner of a btl property at 88 Garden terrace , Toy Town .

                        I wish to inform you that my rental tenant stopped paying rent in Sept 2019 .

                        Due to bad experience from the tenant, I decided to quit the rental business at 31 March 2021 and return the property to own use.

                        Yours sincerely ,

                        sara2 .

                        Comment


                          #13
                          Not sure how this would help me. The tenant wasnt evicted until end of April 2021. House is now sold stc so can i still argue as btl business has now ended that all costs eg eviction expenses to sales proceeds?

                          Comment


                            #14
                            The btl business does not end until you inform the tax office the property have been put to another use.

                            After you have closed the BTL business , you can try to claim the eviction expenses against sales proceeds .

                            Comment


                              #15
                              Thank you for the clarification so would i give actual date of eviction for end or end of tax year for 20/21?

                              Comment

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