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Capital gain Tax loss and gain how to work it out


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Hi I’m hoping someone could help me clear up a few CGT queries I have come across. I had two sell two rental properties last year one for a Loss and one for a Gain I’m now trying to work out if I owe CGT. Here are a few things I need to clear up.

  1. The property I believe I sold at a loss was originally bought for £115k (2005) jointly between me and my ex-partner, but transferred solely into my name in 2007 when the market was high and valued by the mortgage company at £149K. The house was valued at £120Kwhen sold in 2013. Can I express this as a £29K loss(149 – 120) for CGT purposes? Or would I have to use the original purchase price of £115 ?
  2. When I sold the property in 2013 it was transferred into my current partners name and she paid off the mortgage which was under market value. So to value the property correctly for GCT purposes can I legitimately use a source like net house prices.com, and similar the mortgage companies valuation at the time of transfer.
  3. When working out the CGT gain on the property to calculate a gain do I simply use the difference between the by and sale price. Or can I deduct my legal cost etc to reduce the gain ? (eg sold £90K-bought at £50K = gain of £40. Or sold £90K-2k costs (£88K)- bought at £50K = gain of £38K)
  4. Finally I have done my basic calculation.

Gain property

Purchase Price £27,000, Sold Price £98,500, Gain £71,500

Months of ownership 226 , Residence 72 months, Rental 145 months, empty 9 months

Private residence Relief (72months + 18) =90/226 * 71500= £28,473

Period of letting 127/226 * 71500 = £45,873

Empty property 9/226 *£71,500 = £2,847

Letting relief £28,473 (taxable gain)

Capital gain of property£71,500

Private residence Relief (£28,473)

empty (£2,847)

Chargable gain£40,100

Taxable gain allowance 2013/2014 (£10,900)

Tax payable on 40,100 – 10,900 = £29,280 @ 18% = £5270

Loss Property

For the property on which I lost money potentially £29K, would I take this off the £40,100 chargable gain of £40,100 leaving £11,100. And therefore pay 18% tax on (£11,100­- £10900) £200

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This is a complex situation which may involve a tax liability on the part of your partner as well....I don't think there is anyone on this forum who will be able to give you a definitive answer.

I see you have also posted the question on the LanlordZone forum where there are tax experts who should be able to help.

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Yes I was thinking the same as RL.

In cases like this you may need to seek advice from a property tax accountant. Any outlay on their professional fees normally pays dividends to you as they are people who will probably save you a shed load of money.

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