Anyone know anything about Capital Gains Tax?

[Bubbaloo]

We're about to sell a property and some land that dh owns and have been told that we will have to pay Capital Gains Tax on it.Our Solicitor has told us to contact an accountant to sort it out but just wondered if anyone has a clue about how they work it out,so I can get a rough idea how much we're going to have to pay,please.

Tia.

Yes you need to see an accountant as its a tax. Number crunching to do and personal allowances to take into account.
I think there is general information on the inland revenue website though.

Thanks.It's obviously not as straight forward then as I thought.

It's not straightforward. CGT is 40% I think but you prob do need an accountant

You Can phone up the inland revenue - they will give you rough figures. I actually found them helpful

the rate depends on what rate you pay income tax at (if any of your income hits the higher rate, your CGT rate will be 40% - if none of your income is taxed at 40%, then you use the starting band and basic rate band up iyswim).

If you have no other capital gains for the year, the allowance for this tax year is £9200.

It might be worth speaking to an accountant because you should be able to claim some costs against the gain.

Thanks very much everyone.

I'm even more confused now.

The property and land we're selling is where my FIL lives,so we're selling it and buying him a smaller place,then putting whatever we have left towards a bigger place for us.

I was reading an old thread on here and someone mentioned that you may not have to pay so much if you used to live in the property,which dh did,before he met me.Don't know how true that is but think I'll get onto an accountant tomorrow and see what they say.

Is the 40%,40% of what you sell the property for?.

Less your personal allowances. If in both your names you can use both of your PAs

See here. I'm not actually qualified to speak about CGT but have been looking into it myself recently

It's just in Dh's name.The property was left to him about 20 years ago,by an eldery relative.

Tinker-thanks very much but far too complicated for me to understand.

The cgt as far as I remember from studying conveyancing a few years ago, is taxed on the sale price less the purchase price (which the tax man will probably take as the market value at the time of inheritance), then take off a sum that you get from a sort of inflation table of figures that the accountant will know how to get, then take off some expenses say if you renovated it, some allowance for the time it was dp's main residence, and THEN the personal allowance of £9,000 ish and you arrive at the amount of tax.
Thats why you need an accountant .

well put fj, it's hard not writing all the jargon! Woudl definately ask an accountant to calc for you though Bubbaloo, but for a rough guide do as FJ says, just leave off the inflation bit! then you'll know your figure is more than the actual figure will be IYSWIM.

If you have lived in the property at some point then you should not have to pay CGT on the whole gain, only part of it. It is a VERY complex are and you def need an accountant!

Yes you need definate tax advice here and you may want to try and find ways to negate the tax issues. Can your husband gift the land to his Dad and then he gift it back? You probably cannot do that but I think you need advice from a couple of accountants rather than just take the advice of the first one you come across. Try and find someone who specialises in this area too

Thanks.
Dh lived in the property for about 10 years as it was his family home,before we met.
He left his parents living there and his mum passed away about 12 years ago,leaving just his dad there.There is also alot of land with the property,which we are going to seperate from the property and sell individually so it is rather complicated.
I'm also now wondering that when we do sell the property and buy my FIL a smaller place,that'll also have Dh's name on the deeds,so when eventually we sell that,will there be more cgt to pay?

you don't get the inflation relief now - you get taper relief, which reduces the percentage of gain charged depending on how long you have owned it.
If you are selling the land separately you have ISSHOOS and NEED to see an accountant BEFORE you do this (often you just need the tax returns sorting out after). Selling the land separately could land you with a bigger tax charge (all to do with how much land is needed for the enjoyment of a house - if the land is sold separately then you can't argue that the house needs it, so the land may not attract the principle private residence (ie no tax) relief for the years he did live there).
If he lived in it for 10 years then didn't for 12 then 10 + 3 / 10 + 12 ie 13/22th of the gain (less taper relief less £9,200 annual exemption) will be taxable (if the house has ever been your principle private residence then the last 36 months of ownership aren't taxable).

If you are married you MAY also be able to do something with splitting the ownership before sale in order to utilise your annual exemption.

Ring a couple of accountants - all of them should see you free to assess the situation then give you a quote for the work.

Beware that splitting ownership of the property between you may mean that you might have to pay stamp duty on the half you take on, however balance that against the cost of the stamp duty you may pay.

OMG a bigger tax bill will be even worse.
The property is a corner plot bungalow and garage,then completely fenced off behind his garden is another 6 garages which is the 'land' we're selling.It is fairly big so I'm sure whoever buys it,will knock the garages down and build either another bungalow or a house there.
Will get straight on the phone to an accountant I've been recommended,first thing tomorrow morning.

Agree with BigGitDad on the stamp duty - hence the MAY, although you don't actually have to transfer the percentage to the spouse, you can hold it in truct - but then you get solicitors costs aswell....

If the land is garages I think it would almost certainly be treated separately, so one computation for the house (with the principle private residence relief) and another for the garages with out the PPR relief - though both would get the % reduction (taper relief).

Your £9,200 annual exemption is for total gains, so you wouldn't get that against each bit.

Chasingsquirrels - 'inflation' was laymans speak for 'taper relief' - the OP admits that she hasn't a clue so I was trying to make it understandable!!!!
As Eddas so rightly complimented me on.

Will we still have to pay stamp duty even though we are selling both the bungalow and the garages? I thought you only paid SD when you bought something.The property and the garages have just one title number and the deeds are in my dh's name.The plan is to sell both seperately as the estate agent has told us it would be more beneficial financially to do so,starting with the garages first as that's the smaller out of the two.
Sorry for all the questions.

no, the buyer(s) will pay the stamp duty, the comments on stamp duty are if you split the property to use your annual exemption - so there is effectively an extra 'sale' to you first.

FJ - yes I appreciate that, but it used to be inflation with tables, and now it isn't - there is no tables, it is just a percentage reduction per year of ownership.

As a total aside, (something we are going through at the moment), did the estate agent advise you on getting planning permission for the garage area so you could sell it as a building plot rather than just as garages? Surely it would be worth significantly more if you did this, rather than somebody else buying it, getting pp and then reaping the profit?

Well,I did mention that to the agent and they said that they are 99% sure that whoever bought the garages wouldn't have any problems getting pp for a bungalow as it wouldn't overlook anyone and would be in keeping with the area.The valaution we have been given is very good and the agent(who is mt aunt)doesn't think getting pp first would make that much difference.

mt=my