Capital gains tax

[Crisplover51]

Are there any solicitors that could advise please. My dad bought a retirement flat in January so he currently owns two properties, a house worth approx 350/375k which he has lived in as main residence for 41 years and a flat worth 120. He is looking to sell the house shortly. What capital gains tax will he have to pay?

He has asked me to look it up for him online, but it's all a bit confusing. Thanks.

There is a website where you can do an approximate calculation. He will only have to pay capital gains tax on the amount the property gained during the time that it wasn't his main residence, less eighteen months. (Unless anything has changed recently, I'm not up to date beyond last year).

I would have thought the elevated stamp duty would have been more of an issue.

Does he still live in the house and will stay there until it sells? If so, no CGT due to private residence relief.

If he has moved into the flat and sells the house within 9 months, then that final 9 months comes under PRR as well.

If he moves into the flat and sells the house after more than 9 months there is a potential CGT exposure. Depends on the purchase cost, sale value, length of time he owned and length of time he occupied (inc last 9 months regardless). Then he has an annual CGT exemption.
CG = (sale - purchase) / 41 x occupation period.
Less annual exemption.
Taxed at applicable rate.

It isn't going to be very much, even without a purchase cost it would only be around £9k gain for a year, before annual exemption.

The house is his principle private residence until he moves out and doesn't attract CGT.. If he moves into the flat, that will then become his PPR.

Remember he will be able to claim back the additional 5% stamp duty he will have paid on the new property when he bought it, providing he sells the house within 3 years.

Thank you for your replies. He will be moving into the flat before he sells the house, putting the house on the market just as he moves in. Hopefully it sells quickly.There isn't a big problem paying some capital gains really although it's always good to avoid, the worry was paying it on the total gain from 41 years ago until now - we don't know anything much about CGT as you can tell!

He has already paid the extra stamp duty on the flat, but we know he can ask for a refund within a certain amount of time after selling the house.

I assume he has always lived in the house? If so he gets the last 9 months as deemed residence even if he doesn't live there. So basically from the day he moves out it's as if he still lives there for 9 months. If the house isn't sold within that 9 months there will be some CGT to pay when it does sell but as long as it isn't on the market for years it will only be a small amount as he will get Principle Private Residence Relief for all the years he lived there and the last 9 months.

Thanks, very helpful all.

And yes, lived in the house as his only residence since he bought it. Only recently now owns the two properties.

I’d stay in the house until it’s sold. Then move. 9 months isn’t long these days.

His mobility has worsened so he really needs to be in the flat soon. Also being elderly with health issues, he wouldn't cope with having people coming to view whilst he's there. Otherwise I'd agree with you.

Chartered Accountant here. As long as the house sells within 9 months of him moving to the flat it isn't an issue. Health trumps a tiny amount of CGT. Don't worry about it. He has 41 years of principle residence.