Capital Gains Tax

[JoandMax]

We live abroad, have been out of the UK for 3.5 years. We are currently selling our house there with a view to buying where we now live. Need a big deposit here so working out finances!

Does anyone know the approx amount of CGT we will need to pay if house sells for 265k?

[Collaborate]

Purchase price?

Did you ever live there?

If so, when did you leave, and what was the value then?

Simply not enough information in the OP.

[JoandMax]

Yes we lived there for 3 years from 2010 to 2013, purchase price was 205k. I don't know the value when we left as we just rented it out......

[Collaborate]

Profit is 60k, but exclude the increase in value from the time you lived in it, and the 3 years thereafter.

Probably no CGT to pay, but if you want to be sure you need to get a professional valuation done for what it was worth 3 years after you moved out.

[WhenTheXetasFillTheSky]

Collaborate I thought there was now only 18 months relief prior to sale if it's not the PPR?

OP CGT will be charged at 18% or 28% depending on whether you're a basic rate tax payer or higher rate tax payer.

Approximately I've calculated the chargeable gain as £10,000 which is below your personal allowance.

Say the gain is £40,000 from when you bought it and it's been exactly 6 years since you bought it.

£40,000 ÷ 72 (months) = 555.555555

It was your Principle Private Residence for 3 years and you then get a further 18 months disregard prior to sale. There is then only 18 months chargeable to the gain.

£555.5555555 × 18 (months) = £10,000

Of course you know the exact time frame and figures you're looking at.

You can also deduct sale costs from it as well. You also have a personal CGT allowance of - I think - £11,100.

[WhenTheXetasFillTheSky]

Sorry - just saw you were looking at selling for £265,000 not £245,000

Same principle as above then just with £60,000 as the gain.

[fruitboxjury]

OP you can fill out a self assessment online and not submit it, it will calculate what you owe based on exact figures including whether you're higher rate tax payers, the period for which CGT is applicable, gains made in this time etc. That's the best way to find the exact answer, as long as you input the correct information it won't be wrong.

Also, your EA should be able to give you basic guidance on this wrt current regulations and guidelines.

[fruitboxjury]

Also - I would recommend seeking advice (phone HMRC, they are very very helpful) if the property is in joint names.

If it is, then you may be required to split the gains 50/50 and each declare your share of the gain in self assessment. Everyone has £11,000 tax free personal CGT allowance annually (can only be used in current tax year, it doesn't accrue over time if not used). Caveat - again you would need to check with HMRC that this applies to the assets in question.

[JoandMax]

Thanks all, we don't pay any tax so not sure what we'd be classed as for rate......!

I think it looks like we should come in under the threshold or only a small amount over which is basically what I wanted to happen!!

[JoandMax]

We're in a tax free country so don't pay any anywhere......

Will call HMRC tomorrow, thanks all

[fruitboxjury]

Surely it can't be that simple....?? I agree with baby barrister, you need to seek professional advice. HMRC will advise you for free, good luck.

[2016namechangeagain]

There is also something called letting relief which will probably apply to reduce your gain.

www.gov.uk/tax-sell-home/let-out-part-of-home

The link above gives some information and links in the pages around it which may be useful. If your gain is less than the annual exemption you don't need to complete a tax return usually. (If you are married and own the house jointly, you each get assessed on your 50% share).