A quick tax question
Discussion
I hope someone can help. My wife and I have found that the recent recession has taken its toll on us quite a bit and we are struggling to make ends meet. We earn quite well but my earnings have dropped.
So to the question in hand.
About 6 yrs ago we bought a small property in France for our pension. Bit of a "doer upper". We paid around £36k for it and have spent about £12k on it since.
We gave a builder £4.5k as a down payment to do our barn roof and he promptly stripped it and went bankrupt. We simply have no money left at present to fix the roof and I don't want to take out more debt. So we have taken the very difficult decision to sell it. It has been valued at around £55k so we may get back £50k
Will I have UK tax liability on the money? If so how much?
Many thanks in advance
Mike
So to the question in hand.
About 6 yrs ago we bought a small property in France for our pension. Bit of a "doer upper". We paid around £36k for it and have spent about £12k on it since.
We gave a builder £4.5k as a down payment to do our barn roof and he promptly stripped it and went bankrupt. We simply have no money left at present to fix the roof and I don't want to take out more debt. So we have taken the very difficult decision to sell it. It has been valued at around £55k so we may get back £50k
Will I have UK tax liability on the money? If so how much?
Many thanks in advance
Mike
I think you have to pay CGT on any gain over £36k, the £12k you spent is not offset. CGT is 18% but you have an annual allowance of £10,100 so you would only pay 18% on any gains over and above that. So basically you will pay 18% on the sale value over £46k. If it is in joint names you may both be able to use your allowance.
This page is all about CGT
http://www.hmrc.gov.uk/RATES/cgt.htm#2
Just ring HMRC and ask them....they don't bite and are surprisingly helpful!
This page is all about CGT
http://www.hmrc.gov.uk/RATES/cgt.htm#2
Just ring HMRC and ask them....they don't bite and are surprisingly helpful!
If you sell the property for more than you bought it for, there is a liklehood that you could be liable to CGT. However, the "Cost" of the property is made up of -
the original purchase price
the legal costs on purchase
any other ancillliary costs incurred at the time of purchase
development costs incurred on the property between the date of purchase and the date of sale
costs incurred as part of the selling process (agent's fees, property taxes etc)
After the gain has been computed, the Annual Capital Gains Tax Allowance of £10,100 is deducted. The balance is then taxed at 18%.
If the property is jointly owned, the gain is split 50:50 and each individual can make use of their own £10,100 Allowance.
the original purchase price
the legal costs on purchase
any other ancillliary costs incurred at the time of purchase
development costs incurred on the property between the date of purchase and the date of sale
costs incurred as part of the selling process (agent's fees, property taxes etc)
After the gain has been computed, the Annual Capital Gains Tax Allowance of £10,100 is deducted. The balance is then taxed at 18%.
If the property is jointly owned, the gain is split 50:50 and each individual can make use of their own £10,100 Allowance.
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