Capital Gains Tax

[greeneyedmonster]

Something someone said to me yesterday got me thinking....
We bought our current house last year without selling our original one first (stupid I know!). When we eventually sell the old house will we need to pay Capital Gains on it? Nobody has lived in it since we moved and we are still paying full Council Tax on it.

[mazie]

Have a look at this web site.....It should help

http://www.hmrc.gov.uk/cgt/property/basics.htm

[Old_Geezer]

No law expert but I think you have a period of time to sell before it becomes liable for CGT. But even if you do get caught it's only going to be applied to gain made since it ceased to be your main residence, surely.

[bednobs]

if there is even a gain. plus you have an allowance to use up

[ToraToraTora]

no CGT necessary, it will be seen as an interim measure and directly linkable to your current situation. Not sure if there is a time limit for the separation of the 2 events but in your favour is the fact that you have not let it.

[Peter Pedant]

Yeah people have got the right idea

I thought it was a three year gap - but rules change. Anyway before a certain amount of time, the tax (CGT) is nil

And people have pointed out that there is a £ 10 600 allowance.
Actually what you do is transfer half the equity to your dear wife a week or so before completion and the gain is assess on two people's tax return.

and finally, the re is index linking. If you bought for £1000 in 1964 and sold this year at £100 000 - then it is a bit unfair to say the gain is £90k as in fact the pound in 1964 bought much more. The only issue is that the calculation changed in 1992 from one way to another. A professional has to do it quite honestly

and council tax:
yeah I have had to pay full council tax ( not even single persons reduction ) on an empty house. Then you read about the concillors' jolies all that CT pays for and fume......

[themas]

There is no CGT related to the time you occupied the property as your only or principal home, so it is only any increase in value between you moving out & selling which might possibly be involved. As others have said there is a period (I think it is 3 yrs, as PP says) when no charge would apply.

I think PP may be wrong about indexation - I believe that was abolished a few years back.

[buildersmate]

Yup, the smart alecs have this right.

CGT Indexation was removed at the same time the flat rate of CGT was introduced as 18% (for those not on higher tax rates) - which I think was April 2010 from memory.

And it was three years that you were allowed to own the two houses before any assessment for CGT impact applied.

But you do need to declare to HMRC which house is your Principal Private Residence - and it should be the newly bought one.

And the period

[greeneyedmonster]

Thanks everyone-that's put my mind at rest. We will be lucky to break even with the house never mind making a gain so we should be OK. I'd rather lose money on it than pay more money to the taxman! I am a non taxpayer so I suppose we could have always put the house into my name if we had to?

[bednobs]

no