Advice on Capital Gains Tax

[riceyw]

Hi

I bought a house for £55k in 1997 with my partner. We lived in the property for 2 years before purchasing another house (new property in both names). We lived in the new property for 2 years, the original house being rented out.

My partner and I split up in 2000, he got the (new) house we had been living in, I got 'custody' of the old rented house. I continued renting the house up until March of this year - to the original tenant that moved into the house in 1999.

During the 6 years that I have solely owned the house, I haven't purchased another property, and I did in fact live overseas from November 2003 until April 2005 (Revenue and Customs know about this). I moved into the property at the end of March this year, have since renovated it and sold it at the end of October for £157k (the mortgage owed being £91k as I remortgaged twice).

I have completed tax returns since 2000, am just about to file my final one (I hope), and I just wondered if anyone knew what the situation is with regards to capital gains tax, it will have a bearing on how much I can spend on my new house.

Look forward to any comments or advice.

Thanks in advance for your help.

Riceyw

[Tax Accountant]

Hi

I bought a house for £55k in 1997 with my partner. We lived in the property for 2 years before purchasing another house (new property in both names). We lived in the new property for 2 years, the original house being rented out.

My partner and I split up in 2000, he got the (new) house we had been living in, I got 'custody' of the old rented house. I continued renting the house up until March of this year - to the original tenant that moved into the house in 1999.

During the 6 years that I have solely owned the house, I haven't purchased another property, and I did in fact live overseas from November 2003 until April 2005 (Revenue and Customs know about this). I moved into the property at the end of March this year, have since renovated it and sold it at the end of October for £157k (the mortgage owed being £91k as I remortgaged twice).

I have completed tax returns since 2000, am just about to file my final one (I hope), and I just wondered if anyone knew what the situation is with regards to capital gains tax, it will have a bearing on how much I can spend on my new house.

Look forward to any comments or advice.

Thanks in advance for your help.

Riceyw

One half Half owned from 1997 to 2000
Other half bought 2000
Sold October 2006

Total period of ownership from 1997 to 2006 = 9 years

Residence for 2 years
Then let until March 2006
Residence again for 6 months to October 2006

Total period of residence = 2.5 years
Total period of letting = 6.5 years

Total cost = (1/2 share x £55K ) plus value of other half in 2000: 1/2 x £?
Sale value = £157K
Gain = Sale £157K less total cost say £67K = Say £90K

Exempt gain = 2 years + final 3 years = 5 years
Chargeable gain = 4 years /9 years x £90K = £40K
Less letting relief £40K
Less Taper Relief 35%
Less CGT annual exemption = £8,800

My guess is that you don't have any CGT liability at all by a long way.

Ramnik

[riceyw]

Many thanks for your help Ramnik

That's the news I was hoping to hear!

Best wishes

Riceyw

[Tax Accountant]

Many thanks for your help Ramnik

That's the news I was hoping to hear!

Best wishes

Riceyw

My pleasure.

But remember that I have used some estimates in my calculations as all the required information was not provided in your posting.

Ramnik