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Will I have to pay capital gains tax when I sell?

I own a property and my partner owns a property and we each pay and maintain our own mortgages and everything associated with our individual properties. I have owned my place for around 16 years and in that time have gained considerable increase in value. About 4/5 years ago I moved out of my house to live with my partner when her job relocated and my house has been empty for most of that time as we still had links in the area and may come back. My parents stayed in it for about 8 months a few years ago between selling and buying their own house, no rent and I continued to pay the mortgage but they paid council tax, water, etc. Since I do not contribute anything at all towards my partners house and vice versa, I've never considered it a second home and it's not an investment property so I would like to know whether I would be liable for any capital gains tax if I decide to sell my property? And if so, at what value will that be calculated; on the purchase price or the valuation of when I moved out? Although there is still plenty of equity in the property it has lost value between when I moved out and todays market value. Thanks.in advance.


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CGT is based on profit. So sale price less purchase price, less costs of sale. Tax rules can change, but at present you would pro rata the profit by all the years you owned it, disregard the years when it was your main residence, and pay cgt over your cgt allowance on the rest. If you are married and the property were placed in joint names, the same profit would be used but you could use both your annual cgt allowances before calculating tax. 18% if you are a standard rate taxpayer, and higher rate if you are higher.

It would probably be better to sell yours now. Because the CGT is done on a pro-rata basis, a higher and higher proportion of the existing gain will be liable to tax even if there is no further profit. I also don't see much prospect of further profit away from SE England. As well as the years when you lived in it, you can also disregard the last 3 years. Then you can disregard the first £10,600 in taxable gain. So currently your cgt bill would probably not be very high. And as Joe said, get married and transfer the property into joint names and you halve the profit each and you both get £10,600 allowance. Mike

Once you have completed your sale and paid any CGT due, invest the all the money in the wine market. Provided you choose wisely large profits are to be made as there is no CGT liability on wine investment, just don't be tempted to drink any! Royal Mail postage stamps could be a good bet too if you can buy enough before 30th April. An instant profit of 30% is available. It would be wise to avoid the pasty market in the current climate.

Amazing that of the four comments only one answered the question posed.

amazing that of the five comments only one answered the question posed

The first 3 answers answered the question. The third answer was wrong, and the forth answer went off on a tangent and suggested the wine market where folks have been losing much of their investments lately.

@JOHNBOYR If he moved out 4/5 years ago, he should not be claiming PPR for that period. However, he can claim for 3 of those years, so there is only liability for about 10% of the total gain. As the allowance is £10,600 the gain would need to be £100,000 in total before anything would have to be paid. You are probably right but for the wrong reason. However, any further ownership without living there would increase the proportion liable to CGT. We don't know details of the gain, so can't advise on when CGT liability kicks (or kicked) in, but enough information was supplied in my first answer to enable that answer to be calculated. I would recommend selling now. Mike

Thanks for the replies so far. @MikeGGT, if it helps any I bought for £42,000 and house is worth around £155,000 in current condition/market and there is a £55,000 mortgage on the house. Does anyone know why was JOHNBOYR's post removed, it sounded relevant to my question where others that are not have been left? ; 'JOHNBOYR posted I don't think you're liable for CGT. From what you say it appears the property is your PPR ( Principal Private Residence ) and as such no tax is due on disposal. CGT comes into play when you OWN two properties and are disposing of one of them. My advice to you is this. As you don't know where you stand and large tax liabilities are on your mind, see an Accountant. For a very small fee you'll have a guaranteed answer to your current situation and advice that may possibly save you from a future `Tax Trap'.'

He probably removed it because it was incorrect. It was not your PPR for the period you weren't living there. The mortgage amount is not relevant. Your gain appears to be £113,000 less all the costs of the original purchase and selling. You then divide that by the total period of ownership and multiply the answer by the period you were not living there having discounted that period by 3 years. Then deduct £10,600 annual allowance and the remainder should be minimal if there is anything left. Any that is left is added to your taxable income. If you would still be on basic rate, you would be charged 18% or 28% if you would be in higher rate. If you wait a few more years, a much higher proportion would be liable to tax even if there is no further gain in value. Mike