Capital Gains Tax - Due ?
Discussion
As my main activity is not tax these days I'm a bit rusty. Can someone advise on the latest position.
My brother is thinking about moving. He bought his flat for about £70k - say 10 years ago (need to check on exact figures and dates - but the principles will remain the same).
He is not looking to sell and the current value is say £150k (assume after costs to sell).
He lived in the property for a couple of years then moved in live a n other for a few years. When they broke up he moved back and has been there since. So lets say he has lived there half the time - and that includes the last three years.
For the middle period the place was let - net rental income disclosed on his self assessment return (standard rate tax payer).
How much, if any tax is due ? PPR / time of own use splits it in two. Letting relief ?? There is your 10k annual exemption.
The answer clearly affects whether he can afford to move, although if he doesn't he will only pay diesel and motor costs in the long run.
My brother is thinking about moving. He bought his flat for about £70k - say 10 years ago (need to check on exact figures and dates - but the principles will remain the same).
He is not looking to sell and the current value is say £150k (assume after costs to sell).
He lived in the property for a couple of years then moved in live a n other for a few years. When they broke up he moved back and has been there since. So lets say he has lived there half the time - and that includes the last three years.
For the middle period the place was let - net rental income disclosed on his self assessment return (standard rate tax payer).
How much, if any tax is due ? PPR / time of own use splits it in two. Letting relief ?? There is your 10k annual exemption.
The answer clearly affects whether he can afford to move, although if he doesn't he will only pay diesel and motor costs in the long run.
I am not going to set out actual; computations (I would have to charge you for that 
).
However, the basic rules still apply -
he will get Main Residence Relief (plus 3 years) for the period of time he lived in the property.
he will get his CGT Annual Allowance
he should be able to claim the Residential Property Relief
The one thing to take nore of is the old time related allowances (Indexation and later, Taper Relief) were abolished on 6 April 2008 so there is no reduction ion the gain based on inflation.
The good news is that CGT will be calculated at a flat 18% (instead of at the top rate of Income Tax - which was usually 40% for any significant gains).
).However, the basic rules still apply -
he will get Main Residence Relief (plus 3 years) for the period of time he lived in the property.
he will get his CGT Annual Allowance
he should be able to claim the Residential Property Relief
The one thing to take nore of is the old time related allowances (Indexation and later, Taper Relief) were abolished on 6 April 2008 so there is no reduction ion the gain based on inflation.
The good news is that CGT will be calculated at a flat 18% (instead of at the top rate of Income Tax - which was usually 40% for any significant gains).
Edited by Eric Mc on Thursday 18th March 08:11
Thanks Eric - thought you might have the right angle.
Basically it looks like there may be a couple of grand to find - but its all about getting the right dates and right values to work out exact liability. My brother could gain that by selling at a good price and buying likewise. But its an awkward market obviously.
He is a damn good decorator and can always present a place at its best to maximise the opportunity.
Basically it looks like there may be a couple of grand to find - but its all about getting the right dates and right values to work out exact liability. My brother could gain that by selling at a good price and buying likewise. But its an awkward market obviously.
He is a damn good decorator and can always present a place at its best to maximise the opportunity.
Gassing Station | Finance | Top of Page | What's New | My Stuff