Selling refurbished house- what CGT to pay?

[halfax]

house bought for 50,000 in joint names.
spent 12,000 putting a third floor in roof.
2,000 had to put in dpc, due to premortage condition.
1,500 legal , surveys , etc...
2,000, about estate agents fees.
selling at 135,000

wife as no income, so can she use her tax personel allowance against sale?

[TaxationPete]

Was this a developement project it sounds like it, and there will be no CGT but it will attract IT. You should have both been registered as self employed within 90 days of commencement. As the project was joint then the income will be joint and taxed at your individual tax threshold. You sholud have done your homework before jumping in. I blame the programmes like 'Homes under the Hammer' who never mention these issues. What was you intent when you purchased it ?

[halfax]

no , we have the house about 14 years+
why i mention doing the third floor at the time i was told that i could not claim for the work.
sorry for any confusion.

[TaxationPete]

So it was your home to the point of sale then Geeees that's a lot different. If this was your PPR then there is NO CGT or IT at all, or in fact if you sold it within 36 months of moving to a new home. No non of the costs are deductible it was your home. read IR283 on the HMRC web site. Regards Peter

[TaxationPete]

Did you rent this property out. ? If so please provide details. Regards Peter

[halfax]

sorry pete i think i have confused you.
we rented the house from day one. i was just wondering if i could claim for the work against the cgt and also use wifes personel tax allowance as she as no , or littleincome .
thanks pete

[TaxationPete]

So it was a rental property. These are capital enhancements and deductible form the gain as are the legal and sales fees. This is a CGT issue and your wifes income is irrelevant as CGT is flat rate at 18%. I assume you have been declaring the rental income profit 50/50 to HMRC. Did you have all the work done whilst you had a tenant in it, or prior to first let. Regards Peter

[TaxationPete]

After allowances you are in for just over £4,250 CGT each. Regards Peter

[halfax]

had to do the dpc before they would release full loan that was before anyone moved in , but did the other work two years later.
and have declared the income 50/50.

[TaxationPete]

The DPC will still qualify as an enhancement. Remember that the legal fees and associates costs of acquisition are also deductible.

Capital Gains Summary

Purchase Price £50,000 30/04/1995
Indexation 0.000 £50,000
Legal Fees £1,500
Sale Price £135,000 09/07/2009
Enhancements £14,000
Legal Fees £2,000
Gross Gain £67,500
PPR Relief £0 £67,500
Letting Relief £0 £67,500
Taper Relief 0% £67,500
CG Allow'ce 2 £10,100 £47,300
CG Bill £8,514 Total 1/2 each

Regards Peter

[halfax]

thanks pete . you are a true gent.

[TaxationPete]

If you take this to another professional/CTA/Accountant please give them all the facts up front and actual dates. Do you understand everything I have presented for you. Regards Peter

[halfax]

yes , thanks again.