CGT Query


A

Andy

I would like some help with a CGT tax query and need to know what to put in
my April 2003 tax return.

As a single man in Oct 1996 I purchased a house as my only and main
residence for £39,995.

In April 2001 I had the house rewired and so enhanced at a cost of £1,295.

I moved out and went to live with my parents in May 2001 and from 29 May
2001 rented out the house to two tenants for which I received rental income.
This I declared on the Land and Property pages on my tax return.

The tenants moved out and on the 18 October 2002, I sold the house for
£74,995, with estate agents cost of £816.63 and solicitors fees of £200.00.
I used the profit towards buying a house with my partner.

Apart from the rental income I received in 2002/03, my only other income is
full time employment for which I pay tax via PAYE.

Using the above figures, what do I put on my tax return and what is my
liability for CGT?

Andy
 
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R

Ronald Raygun

Andy said:
I would like some help with a CGT tax query and need to know what to put
in my April 2003 tax return.

As a single man in Oct 1996 I purchased a house as my only and main
residence for £39,995.

In April 2001 I had the house rewired and so enhanced at a cost of £1,295.
This enhancement cost would be relevant if there were a taxable
gain, but there is none.
I moved out and went to live with my parents in May 2001 and from 29 May
2001 rented out the house to two tenants for which I received rental
income. This I declared on the Land and Property pages on my tax return.
In this case you are referring to the return for 2001/02. I hope you
deducted all the usual expenses such as insurance and mortgage interest.
The tenants moved out and on the 18 October 2002, I sold the house for
£74,995, with estate agents cost of £816.63 and solicitors fees of
£200.00. I used the profit towards buying a house with my partner.

Apart from the rental income I received in 2002/03, my only other income
is full time employment for which I pay tax via PAYE.

Using the above figures, what do I put on my tax return and what is my
liability for CGT?
You put the rental income on the return. I'm sure there is somewhere
where you have to note that you did in fact sell an asset worth more
than twice the CGT exemption, but do not worry, you have no CGT
liability whatsoever, because the house has been your Principal Private
Residence and therefore the last 36 months of ownership qualify for
Private Residence Relief no matter what its actual status was thereduring.
During the entire time prior to the last 36 months you qualify for PRR
based on actual status.

You don't even need to bother with indexation allowance and taper relief.
 
J

Jon Griffey

Andy <[email protected]?.?.invalid> said:
I would like some help with a CGT tax query and need to know what to put in
my April 2003 tax return.

As a single man in Oct 1996 I purchased a house as my only and main
residence for £39,995.

In April 2001 I had the house rewired and so enhanced at a cost of £1,295.

I moved out and went to live with my parents in May 2001 and from 29 May
2001 rented out the house to two tenants for which I received rental income.
This I declared on the Land and Property pages on my tax return.

The tenants moved out and on the 18 October 2002, I sold the house for
£74,995, with estate agents cost of £816.63 and solicitors fees of £200.00.
I used the profit towards buying a house with my partner.

Apart from the rental income I received in 2002/03, my only other income is
full time employment for which I pay tax via PAYE.

Using the above figures, what do I put on my tax return and what is my
liability for CGT?
All other things being equal as this has been your sole private
residence the final 36 months of ownership are deemed to be covered by
private residence exemption so it looks like the whole lot is exempt.

Revenue Helpsheet IR283 has more info and some useful examples.

http://www.inlandrevenue.gov.uk/pdfs/2002_03/capital_gains/ir283.pdf
--
Jon Griffey FCCA ATII
Hackett Griffey
Chartered Certified Accountants & Registered Auditors
2 Mill Road, Haverhill, Suffolk, CB9 8BD

Tel (01440) 762024

www.griffey.demon.co.uk

See website for disclaimers
 
A

Andy

Thank you for your replies, but I still want to know what and where I put
the details of this disposal on my tax return?

For I feel sure that it has to be declared somewhere, even if just to let
the tax office cast their eyes over the calculation and note the
circumstances (dates of my residence) of the disposal to agree it is covered
by private residence exemption and so exempt from CGT.

Andy
 
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R

Ronald Raygun

Andy said:
Thank you for your replies, but I still want to know what and where I put
the details of this disposal on my tax return?

For I feel sure that it has to be declared somewhere, even if just to let
the tax office cast their eyes over the calculation and note the
circumstances (dates of my residence) of the disposal to agree it is
covered by private residence exemption and so exempt from CGT.
The relevant place would appear to be question 8 on page 2. It
asks you to tick the yes-box if, having disposed of your home, you
need to fill in the capital pages. In the notes (on page 7 of the
guide) which Q8 tells you to read before answering, it basically
tells you that you don't need to do this if the gain was wholly
exempt, and it confirms that this is the case when a house has been
your PPR throughout your ownership, ignoring the last 3 years.

There appears to be no doubt at all, in your circumstances, that
your gain is wholly exempt. Therefore you don't need to tell them
anything about this disposal at all at all.
 

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