Jokes1 min ago
How is Capital Gains Tax relief worked out?
2 Answers
If someone wanted to give a house (second home for past three years) to their son.
I need to know if relief is worked out for every year owned.
The house was purchased in 1986 for £35,000. The market value at the moment is about £147,000.
Is there likely to be much to pay in CGT?
I need to know if relief is worked out for every year owned.
The house was purchased in 1986 for £35,000. The market value at the moment is about £147,000.
Is there likely to be much to pay in CGT?
Answers
1 to 2 of 2
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Start here (and have a stiff drink ready for when you've finished trying to get your head around it!):
http://www.hmrc.gov.uk/cgt/
Chris
http://www.hmrc.gov.uk/cgt/
Chris
You may indeed be fortunate.
CGT is levied on the net capital gain of an asset, unless an exemption applies.
One of the exemptions is 'principal private residence relief' and this applies to one's residence. You can elect which residence is your PPR - ask your MP - he/she is bound to know more about this than the average person. You can have only one PPR so when this house ceased to be your PPR three years ago (because it became your second house), PPR ceased to exist.
However, by another quirk in the 'rules', no CGT is payable on the last 36 months of ownership of a property, provided you have lived in it as your PPR for at least part of the ownership (you have).
So provided you have transferred the house to your son within the 36 months of it not being your PPR, no CGT assessment should be due.
I am not an accountant, so you cannot be 100% of my advice (and if I was an accountant I would be charging you for such information); but since getting the timing of this alsolutely right is important to you, I advise you youu do consultant with an accountant to ensure that you avoid any CGT liability.
BM
CGT is levied on the net capital gain of an asset, unless an exemption applies.
One of the exemptions is 'principal private residence relief' and this applies to one's residence. You can elect which residence is your PPR - ask your MP - he/she is bound to know more about this than the average person. You can have only one PPR so when this house ceased to be your PPR three years ago (because it became your second house), PPR ceased to exist.
However, by another quirk in the 'rules', no CGT is payable on the last 36 months of ownership of a property, provided you have lived in it as your PPR for at least part of the ownership (you have).
So provided you have transferred the house to your son within the 36 months of it not being your PPR, no CGT assessment should be due.
I am not an accountant, so you cannot be 100% of my advice (and if I was an accountant I would be charging you for such information); but since getting the timing of this alsolutely right is important to you, I advise you youu do consultant with an accountant to ensure that you avoid any CGT liability.
BM
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