Selling a house - CGT

[John]

Hi all,

Yet another question about CGT - sorry ;-)

I have a small terrace house that I lived in until last year but
is not now my principle residence. The house was gifted to me
about 4 years ago and is currently rented out and the income
declared on my tax.

I am looking at selling it and adding a bit extra to buy a bigger
house in a less expensive area.

My questions are:

1) Would I have to pay CGT if I was reinvesting the money into another
property?
2) Would I have to pay CGT on the full sale price?

If I have to pay a substantial amount of CGT would it be better
in your opinions for me not to sell the property but instead to get
a mortgage against the value of the house?

Sorry for all the questions but any advice would be greatly appreciated!

Thanks

John

 

[Tumbleweed]

Hi all,

Yet another question about CGT - sorry ;-)

I have a small terrace house that I lived in until last year but
is not now my principle residence. The house was gifted to me
about 4 years ago and is currently rented out and the income
declared on my tax.

I am looking at selling it and adding a bit extra to buy a bigger
house in a less expensive area.

My questions are:

1) Would I have to pay CGT if I was reinvesting the money into another
property?
2) Would I have to pay CGT on the full sale price?

(1) is irrelevant as to whether you pay tax or not.

 

[Doug Ramage]

Hi all,

Yet another question about CGT - sorry ;-)

I have a small terrace house that I lived in until last year but
is not now my principle residence. The house was gifted to me
about 4 years ago and is currently rented out and the income
declared on my tax.

I am looking at selling it and adding a bit extra to buy a bigger
house in a less expensive area.

My questions are:

1) Would I have to pay CGT if I was reinvesting the money into another
property?
2) Would I have to pay CGT on the full sale price?

If I have to pay a substantial amount of CGT would it be better
in your opinions for me not to sell the property but instead to get
a mortgage against the value of the house?

Sorry for all the questions but any advice would be greatly appreciated!

Thanks

John

1. Reinvestment will not reduce the CGT. However, as it has been your PPR,
the last 3 years of ownership are exempt. This should mean that no CGT is
payable if the sale takes place within the next 2 years.

2. No - only on the gain. The "gross" gain is the difference between the
sale price and probate value - less allowable expenses and other reliefs
(e.g. taper relief and Lettings Relief).

 

[Ronald Raygun]

2. No - only on the gain. The "gross" gain is the difference between the
sale price and probate value - less allowable expenses and other reliefs
(e.g. taper relief and Lettings Relief).

"Probate value"?

 

[John]

1. Reinvestment will not reduce the CGT. However, as it has been your PPR,
the last 3 years of ownership are exempt. This should mean that no CGT is
payable if the sale takes place within the next 2 years.

<snip>

Doug,

Many thanks for the reply - can I confirm that I haven't lived in the
property since last year - is your response still correct and no CGT would
be payable?

Thanks again

John

 

[Doug Ramage]

"Probate value"?

Um, where did that come from? Dealing with a few Wills recently, so must be
in my sub-conscious.

It should be market value - unless the "gift" arose from the Will.

 

[Doug Ramage]

<snip>

Doug,

Many thanks for the reply - can I confirm that I haven't lived in the
property since last year - is your response still correct and no CGT would
be payable?

Thanks again

John

Yes, the property only needs to be your PPR at some time to qualify for the
last 36 months exemption.