Will I have to pay cgt on my property which I have both lived in and rented out?

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

    Will I have to pay cgt on my property which I have both lived in and rented out?

    I've accepted an offer on my residential property. I bought it at the start of 2002 when I lived in it for 6 months. I rented it out until mid 2006 when I lived in it again for a year before renting. I then moved back in start of 2011. Will I have to pay capital gains tax?

    I have one more question. I have found loads of basic calculators on line but none allow me to input dates of living in what has essentially been a rental property. Can anyone forward me a link to a more sophisticated calculator?

    #2
    You need to provide actual dates and values, your costs of acquistion and an estimate of the sales and legal fees and you estimated gross Income this FY. It sounds if that it will qualify are your PPR and the last 36 months will be exempt, read HS283 on the HMRC web site and you will be entitled to claim Letting Relief of up to £40,000 to further offset and CG liability. Regards Peter

    Comment


      #3
      Purchased March 2002 for £325,000
      Selling January 2012 for 650,000
      Residential first six months of 2002
      Residential June 2006 to July 2007
      Residential Feb 2011 to current
      All other times rented
      Stamp duty on purchase (not sure but what ever percentage was at the time)
      Legal fees on purchase £500
      Legal fees on sale £800
      Agency fee on sale 2.5% plus vat
      Income 70k
      Lease extension 40k (paid out whilst residential)

      Comment


        #4
        I have assumed you lived there as you only private residence from March to Sept. The lease cost is allowable and the numbers look like this :
        Purchase 325000 14/03/2002
        Disposal 650,000 14/01/2012
        Total Gain 264,200
        PRR 143,295 64 118
        Capital Gain 120,905
        Lett Relief 40,000 Qual Days 1310
        Net Gain 80,905
        CG Allow 10,600
        CGT 18% 0 0
        CGT 28% 19,685 19,685

        CGT Bill 19,685

        Are you married and have you signed the exchange contract yet. Regards Peter

        Comment


          #5
          Yes, it is my only private residence

          I'm single and I haven't signed exchange yet.

          Also, I purchased a lease extension on another rental property for £30,000 for the tax year of 2010 to 2011. Can I use this to bring down my liability?

          Comment


            #6
            Where did you live when you were not living here, and why?

            Comment


              #7
              When not living in the flat which I'm due to sell, I was living in the other property on which this year I obtained a lease extension for 30k. I moved because I was bored living in the other place.

              Comment


                #8
                I think a lease extension can only be claimed against the disposal of the property that related to the lease. Regards Peter

                Comment


                  #9
                  One of the two lease extensions was on the property which I'm currently selling but I purchased the extension during the brief time I lived there. Can this extension still be claimed against the disposal of the property? If not, what would be final cgt bill?

                  Comment


                    #10
                    The figure I gave you includes the £40,000 lease extension. Regards Peter

                    Comment


                      #11
                      I've been advised by another source that I can't offset the cost of the lease extension on the other rented flat on my tax return for this year. I can only claim against the disposal of the property once I sell it. This leaves me with a hefty tax bill when I sell my residential property. If I have my other flat completely refurbished, can I offset this amount against my tax return or must I still wait until I sell the flat. I suppose this question is whether the amount is a capital expense or maintenance expense?

                      Comment


                        #12
                        As I said a Lease Extension is only deductible from the disposal of the property the lease refers to. A refurb would be a revenue issue so would change your capital position. A 20K CGT bill is not a lot compared to the £325 K gain you have made and a rental income over the rented periods. Regards Peter

                        Comment

                        Latest Activity

                        Collapse

                        • Reply to Caught out by changes to Capital Gains Tax
                          by reluctantlandlord1976
                          Thank you Gordon, didn't see your response this afternoon. I will look at this with fresh eyes tomorrow as it's late now.
                          I've put some figures in my reply to a post just now but answers below to your questions.

                          a] £80k Jan 2021 sale price.
                          b] As property purchased before...
                          08-12-2021, 00:55 AM
                        • Caught out by changes to Capital Gains Tax
                          by reluctantlandlord1976
                          I appreciate 'ignorance' is no excuse, however there are some mitigating factors, i.e. due to illness etc.

                          1. Previous family home rented out - terrible tenants - left owing rent, bad repairs etc. [usual story for some] subsequently property not let for 2 years for a number of reasons while...
                          06-12-2021, 13:51 PM
                        • Reply to Caught out by changes to Capital Gains Tax
                          by reluctantlandlord1976
                          Andrew, apologies only just seen your post [was it awaiting approval did you say?] answers are:

                          Purchased March 1982 as joint tenancy - so equal split of 33 1/3% each party
                          Parent 2 died September 2007 - as joint tenancy I inherited their share - so at this point I own 100% of property...
                          08-12-2021, 00:41 AM
                        • Reply to Caught out by changes to Capital Gains Tax
                          by reluctantlandlord1976
                          JP Keates
                          I wasn't aware that refurbishment deductions only applied in terms of letting out the property. On the CGT calculator it asked 'How much have you spent on improvements since you became the property owner'.....

                          Here's the timeline:

                          March 1982 - 1992 3 Owners,...
                          07-12-2021, 18:01 PM
                        • Reply to Caught out by changes to Capital Gains Tax
                          by reluctantlandlord1976
                          JP Keates et al - thank you very much for your assistance. I have this afternoon emailed an accountant to try and get an appointment urgently. I hadn't realised it was all so complicated and it was remiss of me to not be aware of the CGT changes made in 2020 due to not renting out the property. Thanks...
                          07-12-2021, 17:28 PM
                        • Reply to Caught out by changes to Capital Gains Tax
                          by jpkeates
                          Refurbishment while you were living there is only allowable against CGT if it was solely and exclusively for the business, so if it was to prepare the property to be let, it would be OK.
                          If it was simply to improve what was then your home, it fails the basic test.

                          Get yourself to...
                          07-12-2021, 16:22 PM
                        • Reply to Caught out by changes to Capital Gains Tax
                          by AndrewDod
                          The probate resets a lot of the stuff, but my main response was unapproved
                          07-12-2021, 15:36 PM
                        • Reply to Caught out by changes to Capital Gains Tax
                          by AndrewDod
                          You are really short on detail:

                          Date (year & month) bought in joint names ______ (what % was yours then)
                          Date it converted to your sole name ______ (presumable date of death of parent 2?)
                          Declared vale at probate _________
                          Capital expenses between date of probate 2...
                          07-12-2021, 15:33 PM
                        • Reply to Caught out by changes to Capital Gains Tax
                          by reluctantlandlord1976
                          We were all joint owners. Bought it with parents. I lived there for 10 years before buying own home. I became sole owner upon their deaths. Rented out since 2007-2019. Empty last two year as trying to sell. Hence I was off the landlord radar. I am now extremely worried by your statement that refurbishment...
                          07-12-2021, 14:53 PM
                        • Reply to Caught out by changes to Capital Gains Tax
                          by AndrewDod
                          Let us know the exact timescale and money involved year by year - I am sure some kind person (or even myself) with do a calculation for you so that you can assess the risks involved
                          07-12-2021, 14:33 PM
                        Working...
                        X