Honestly was not aware of Capital Gains Tax!

[Blueberrymuffin8]

Hello everyone, hope everyone is doing well.

I havent felt so good since last night when I did my self assessment form. I know a lot of people say this but I genuinely thought I would only have to pay tax on any rental income I received.

Long story short, I rented my house out to a friend (for just over half the going monthly rate) for 17 months of the 56 months we lived there. Reason being we had to live closer to my husband's new job. We came back 7 months before we actually sold in June 2023 (I know, I've missed the deadline!) Renting it out was not to make a profit, we just genuinely didnt have the time to put it on the market. We did end up having to sell because we couldnt keep renting where we moved to.

Over the 6 years we owed the house we prob spent 80k on work, including large extension at the back. Bought for 255k in Mar 2017 and sold for 417k in June 2023.

Does anyone know how much tax I need to pay? I have no idea how to calculate the private residence relief for this either. I'm scared because we do not have savings to fork out for this 'gain'.

Do I need an accountant?

Any help would be so welcome right now. I didnt sleep at all last night.

Was it not your primary residence when you sold?

Not enough information to answer
Was the house just in your name?
Do you mean capital gains or have you also not paid income tax on the rental income?
Why do you think the amount spent on the extension is relevant? (it may be but need to clarify your thinking)

Hesitate to respond as I'm not an accountant but also looking at need to pay CGT soon.

Lots of good info here: HS283 Private Residence Relief (2020) - GOV.UK (www.gov.uk), You may find you are covered by a PRR exemption due to moving out to be near your husband's work.

Personal tax is complicated, speak to an accountant and ask them to file the return for you.

Oh my word this is probably a very costly mistake 😱😱😱😱😱

you need to speak to a good accountant they may be able to do some damage limitation

I think you need to speak to an accountant. I don't get why you didn't know about CGT though. I've never been in a situation where I've needed to pay it but even I know the general principles.

If you lived in the house before and after you rented it out, you should be ok. See attached screenshot (PP’s link also takes you there).

Check with the sol who did your conveyancing if you’re worried. No need to instruct anyone new.

Going by what you have said (and there are lots of other questions to answer), you owned the property for 75 months and rented in out for 17. So max CG taxable amount on £82k gain (there will be other deductions beyond the £80k you state) will be 23% of £82k = c.£19k (to pay tax on, not bill of).

You have a CG allowance this tax year of £6k (x2 if jointly owned and no other CG taxable gains). CGT rate depends on you income tax band.

Did you live in it all the time except the 17 months? Was it your and your spouse's only residence during that period?

PRR may be in play if total absence was under three years (so no CGT to pay) or because you moved for work proximity.

You also get relief for (I believe) the final 9 months of ownership - see the HMRC guidance.

Again, I'm not an account so others may have better advice!

There's several good calculators online. The key things are the value of the property when you first rented it out and the value when it sold - then you get an annual allowance each if coowned.

https://www.gov.uk/tax-sell-property/work-out-your-gain - I always point clients to this link when CGT is mentioned.

You can run the figures through there, and remember that it asks for your share, not the total.

However, this is one case, where paying an accountant a few hundred, could potentially save you a few thousand. Be prepared to be turned away at this time of year though, but hopefully you will find one who will take you on.

I would definitely go to an Accountant for this one. My dsis thought that they would have to pay a lot but the accountant really understood the rules and the correct amount payable was much less.

Don't panic. We had a very similar situation to yours (bought for 270K, spent 100K renovating, sold for 530K seven years later, having rented it out for the final three years because we were on an overseas assignment). PWC did the calcs for us and our GC liability was zero, even before taking into account the money we had spent on renovations.

Definitely worth taking this to an accountant.
There are so many variables as others have said above.
It likely won't cost you a huge amount in accountancy fees but will prevent you from getting it wrong and paying too much tax or getting a penalty (or worse) for underpaying.

Agree with others, it would be money well spent to get an accountant to sort this out for you, and they could save you thousands, as well as a shedload of stress.

If you sold in June 2023 it’s not relevant to your current tax return due on 31 Jan which is for the period 6 April 2022 to 5 April 2023. This is a next year problem.

You need an accountant, but you've left it very late for that

This is not accurate for CGT on residential property. From HMRC website:

You must report and pay any Capital Gains Tax due on UK residential property within:

• 60 days of selling the property if the completion date was on or after 27 October 2021

Get an accountant. I think from your figures there a couple of "reliefs" that will bring your liability down to zero although I don't knkw the penalty for not declaring the sale within the relevant time.

Thank you all for your messages. I really am very grateful for all your reponses and taking the time to help me. So so kind.

I'm just about to send all the details to an accountant. I can't deal with the stress on my own. I will keep you posted!

Yes it was but not sure that matters.

Thank you. Not sure I wanted to read that :((

Good luck @Blueberrymuffin8 ! Glad you've found someone to ensure it's all correct and reduce your stress.

Wow. Thanks for this. Has made me feel slightly more positive. Perhaps it's different for those who work abroad? We only moved 70 miles away. Not sure. I'll soon find out!

Is that the only house you owned?

Yes