The other half and I bought a buy to let (16/5/97)
I would be very grateful if somebody could give me an idea of our capital gains tax if we decided to sell this year
Purchase price 39,000 estimated sale price after fees 100,00 the mortgage has been fully repaid last year we are both 22% tax payers we have spent nothing over the period that we can set against we have not used any of our personal allowances this year
Is there anything else that you may need to know?
Bruno
I'll assume this includes fees, if not add them first, and redo the calculation below using the higher figure.
I'll assume you meant £100,000. So basically the raw gain is £61,000.
This has no bearing.
Yes, how much "spare" 22% band do you have before you're into 40%? But I don't really need to know, because I can give an answer in terms which allow you to work it out for any amount of "spareness".
You're due indexation allowance using the May 1997 factor of 0.036 times purchase price and acquisition cost, which makes £1404. This reduces your gain to £59,596. Wow. Nothing much to write home about.
Since you don't mention the place having ever been your home, you get no Private Residence Relief or Letting Relief.
Taper relief applies based on 6 whole years having elapsed between April 1998 (when it was brought in) and date of sale. This relieves
25% of the gain, so your tapered chargeable gain is £44,697, which would be £22,348 for each of you. Taking away the £8,200 allowance leaves an amount chargeable of £14,148 (each).For each of you, if all your other income put together is such that adding £14,148 would *not* put you over the higher rate tax threshold, then you'd have to pay tax of 0.2 * £14,148, i.e. £2,829.60 (each). But if that addition would put you over the higher rate threshold by £X, you'd have to pay an additional 0.2 * £X.
If one of you, but not the other, has more than £14,148 spare 22% band left, and you are married (to each other), the higher can gift beneficial interest in an appropriate share of the house to the lower, so that less of the shared gain is taxed at 40%.
Still, worst case, if both of you were already almost 40% taxpayers, is that you'd pay £11,318 between you, and best case, if between you you can absorb £14,148 of income without crossing the 40% line, is half of that, i.e. you'd pay £5,659 between you.
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