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selling property
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I'm considering selling my flat. I have owned it for 16 years and have been letting it out for the last 9. I stand to make approx �80,000 profit before expenses. What are the tax implications of this if any.Thanks in advance.
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You will be liable for capital gains tax, im not up to date on exact figures but it will be somewhere in the region of 40% of the profit on the flat once you have deducted your allowance for capital gains which is currently around 8k each (so if in joint names allowance of 16k) hope this is helpful.
These are the steps you need to take:-
1. Calculate the gain, by deducting proceeds from cost price, then deduct any cost of purchase and sale (legal, estate agents, stamp duty)
2. Deduct the cost of any improvements (not maintenance) of the property over the years
(Lets say the gain calculated in this way is �78000)
3. Deduct the proportion of the gain relating to when you lived there as your main residence (if this is the case) � plus the last 3 years. In your case 10/16:- on the above figure, deduct �48750.
4. Deduct an allowance for inflation from the date of purchase until April 1998. This would be approx 28% of the COST PRICE (to calculate accurately you need to know the month of purchase. Lets say you are now left with a gain of �15000.
5. Deduct taper relief of 35% of the remaining gain.
6. The remaining gain is approx �9750, on which you are entitled to Lettings Relief. The maximum is either �40000 or the amount of private residence relief if lower. In your case the whole �9750 will be eligible for relief, bringing the chargeable gain to nil.
7. You do have an annual Capital Gains Exemption of �8500, should you need it.
Obviously these figures are approximate, but it doesn�t look as if you will have much of a tax bill, if any.
1. Calculate the gain, by deducting proceeds from cost price, then deduct any cost of purchase and sale (legal, estate agents, stamp duty)
2. Deduct the cost of any improvements (not maintenance) of the property over the years
(Lets say the gain calculated in this way is �78000)
3. Deduct the proportion of the gain relating to when you lived there as your main residence (if this is the case) � plus the last 3 years. In your case 10/16:- on the above figure, deduct �48750.
4. Deduct an allowance for inflation from the date of purchase until April 1998. This would be approx 28% of the COST PRICE (to calculate accurately you need to know the month of purchase. Lets say you are now left with a gain of �15000.
5. Deduct taper relief of 35% of the remaining gain.
6. The remaining gain is approx �9750, on which you are entitled to Lettings Relief. The maximum is either �40000 or the amount of private residence relief if lower. In your case the whole �9750 will be eligible for relief, bringing the chargeable gain to nil.
7. You do have an annual Capital Gains Exemption of �8500, should you need it.
Obviously these figures are approximate, but it doesn�t look as if you will have much of a tax bill, if any.
These are the steps you need to take:-
1. Calculate the gain, by deducting proceeds from cost price, then deduct any cost of purchase and sale (legal, estate agents, stamp duty)
2. Deduct the cost of any improvements (not maintenance) of the property over the years
(Lets say the gain calculated in this way is �78000)
3. Deduct the proportion of the gain relating to when you lived there as your main residence (if this is the case)� plus the last 3 years. In your case 10/16:- on the above figure, deduct �48750.
4. Deduct an allowance for inflation from the date of purchase until April 1998. This would be approx 28% of the COST PRICE (to calculate accurately you need to know the month of purchase. Lets say you are now left with a gain of �15000.
5. Deduct taper relief of 35% of the remaining gain.
6. The remaining gain is approx �9750, on which you are entitled to Lettings Relief. The maximum is either �40000 or the amount of private residence relief if lower. In your case the whole �9750 will be eligible for relief, bringing the chargeable gain to nil.
7. You do have an annual Capital Gains Exemption of �8500, should you need it.
Obviously these figures are approximate, but it doesn�t look as if you will have much of a tax bill, if any.
1. Calculate the gain, by deducting proceeds from cost price, then deduct any cost of purchase and sale (legal, estate agents, stamp duty)
2. Deduct the cost of any improvements (not maintenance) of the property over the years
(Lets say the gain calculated in this way is �78000)
3. Deduct the proportion of the gain relating to when you lived there as your main residence (if this is the case)� plus the last 3 years. In your case 10/16:- on the above figure, deduct �48750.
4. Deduct an allowance for inflation from the date of purchase until April 1998. This would be approx 28% of the COST PRICE (to calculate accurately you need to know the month of purchase. Lets say you are now left with a gain of �15000.
5. Deduct taper relief of 35% of the remaining gain.
6. The remaining gain is approx �9750, on which you are entitled to Lettings Relief. The maximum is either �40000 or the amount of private residence relief if lower. In your case the whole �9750 will be eligible for relief, bringing the chargeable gain to nil.
7. You do have an annual Capital Gains Exemption of �8500, should you need it.
Obviously these figures are approximate, but it doesn�t look as if you will have much of a tax bill, if any.
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