CGT question

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    #16
    There will most likely be some CGT to pay.

    It is a complex calculation as from the point it was rented the CGT is calculated after 18 months from that point, then you have to consider other reliefs she may be entitled to. Without knowing what the potential capital gain is makes it hard to determine but I will use £100,000 as an assumptive example.

    The gain of £100k over 5 years since 2011 equates to £20,000 per annum, as I mentioned the first 18 months are also CGT free so £20,000 times 3.5 years is £70,000. One relief if not already used is letting relief which is £40k reducing the taxable gain to £30k. An individual also has an annual exemption of £11,100 so the final potential taxation is £18,900. If she is a higher rate tax payer then the tax charge on this assumptive figure would be at 28% equal to £5,292.

    As I mentioned this is assumptive but I hope it helps you calculate what may be owed.

    Comment


      #17
      Originally posted by AndrewDod View Post
      I agree with Gordon999's calculation with one concern (see below). There is likely no CGT, but that is not because there has only been a small recent increase. In transactions of much higher value this becomes a big issue because people a) imagine that if the increase in price occurred when it was PPR and then they let out, that somehow the increase while PPR does not matter, and b) transfers from husband to wife have purchase value backdated and are not written off at death.

      However Gordon, I wonder whether she will really be able to take PPR as 30 out of 35 years off her share. Although she was "resident" as you say, she was not an owner at all during much of this period of residence -- so can you count PPR time if you actually have no ownership at all. This applies to one of my properties and has long bothered me. In other words is PPR inherited on a spousal transfer???
      I don't think there is enough information to give the correct information. Personally I would take the date she became a joint owner as the start date for PPR but we are missing this date. If pre or post 83 I believe the two starting figures could be different.

      Comment


        #18
        Originally posted by September19 View Post
        There will most likely be some CGT to pay.

        It is a complex calculation as from the point it was rented the CGT is calculated after 18 months from that point, then you have to consider other reliefs she may be entitled to. Without knowing what the potential capital gain is makes it hard to determine but I will use £100,000 as an assumptive example.

        The gain of £100k over 5 years since 2011 equates to £20,000 per annum, as I mentioned the first 18 months are also CGT free so £20,000 times 3.5 years is £70,000. One relief if not already used is letting relief which is £40k reducing the taxable gain to £30k. An individual also has an annual exemption of £11,100 so the final potential taxation is £18,900. If she is a higher rate tax payer then the tax charge on this assumptive figure would be at 28% equal to £5,292.

        As I mentioned this is assumptive but I hope it helps you calculate what may be owed.
        I disagree with this - it's not the gain since 2011 but it's apportioned over the total period of PPR (with consideration for the last 18 months of ownership) less lettings relief.

        Comment


          #19
          Originally posted by pebblepebble View Post
          Personally I would take the date she became a joint owner as the start date for PPR but we are missing this date.
          Yes that's what I think. Residence + ownership make for PPR, not residence alone (even if it is the marital home).

          Comment


            #20
            Originally posted by pebblepebble View Post
            I disagree with this - it's not the gain since 2011 but it's apportioned over the total period of PPR (with consideration for the last 18 months of ownership) less lettings relief.

            I agree with your disagreement

            Comment


              #21
              Hi All,

              I finally have the date that my mum became a joint owner! It was the 24th July 1989 and my parents remortgaged it for £25k, but we do not know the actual valuation at that date.

              My dad bought the house on 23rd March 1972 for £4k. His PPR.

              Dad died 11th June 2013. Mums name was registered with the deeds at the LR 27th February 2014 with a value of £115k.

              The current property has been rented since May 2011 and has a current value of £125k.

              Please let me know if you need any further info.

              Again, THANK YOU all so much!

              Comment


                #22
                Jess3,

                Your mum does not have any CGT to pay.

                Comment


                  #23
                  How do I work out the calculation now taking into account the year she became a joint owner?

                  Comment

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