CGT advice please

[Into the unknown]

Hi all, please can somebody help!

I bought my property in 2001 for £45000 and moved out in 2008. My brother lived there rent free for a couple of years and we have rented the property for the last 3 years.

It is worth around £110000 at the moment.

What CGT would we be liable to pay as I know we're unlikely to sell before April so our relief would be halved.

Thank you for your help in advance.

[Gordon999]

Assuming you sell after april , you probably will make approx gain of 65K over 13 years and you get residence relief for 7 years +1.5 years after moving out . Your brohther's stay does not count.

So the share of gain during the letting period is 65x 4.5 /13 = 22.5K which should be cancelled out by lettings relief up 40K + 10.9K cgt allowance.

[Into the unknown]

Hi Gordon,

Thank you very much for the advice. I really appreciate it.

This is probably a stupid question but is the gain worked as you've shown above, price at purchase and price when sold or is it worked out from how much you've gained once the mortgage is taken off? In our case we have around £28,000 left on mortgage so the gain would be around £82000. Either way it looks like we'll be fine if we sell in the next year or so?

Another question: we set up a declaration of trust and my wife has been paid the rent and filing the self assessment tax form each year as I am a higher rate tax payer. The house is still in my name though and it was myself who lived there. What would be our next steps to ensure I get the tax relief?

Is it easy enough to do ourselves or worth getting a solicitor/accountant to advise closer to the time?

Thank you again.

[Gordon999]

The capital gain over 13 years ( under HMRC rules for calculating the tax liability ) is the 2014 sale price less 2001 purchase price less solicitor costs ( in 2001 + 2014) less any selling estate agent / advertising costs.

The figure of 82,000 which you mentioned, is your "proceeds from sale" after paying off the outstanding mortgage loan.

You need to seek professional advice on DOT before you sell as W may not be able to claim the lettings relief.

[King_Maker]

Unfortunately, as many people are discovering, any mortgage is NOT deductible for CGT purposes.

As Gordon999 has said, the DoT may have compromised PPR Relief and Lettings Relief. If so, there may be a negligence claim against the original solicitor.

[TaxationPete]

"Did your wife live there as well". Regards Peter

[Into the unknown]

Thanks all. Will definitely seek professional advice. My wife didn't live at the property.

[TaxationPete]

So where did your wife live, do you have another house. A Husband and Wife can only have one PPR. Regards Peter

[Into the unknown]

Hi Peter,

I have sent you a private message with all the details. Thank you.