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Paying cgt

Started by goodlandlord, February 01, 2024, 10:11:08 AM

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Hi rented house for 14 yrs now selling we are in lowest tax band but it seems you have to pay 28percent over 50 grand we have been undercharging the rent for these 14 years by 200 pounds and not had any rent for last 8 months is this claimable with CGT also the borough has been charging 200 ponds a month for an empty house while we were selling thanks any advice


The council tax is allowable against income, not capital gains. The missing and undercharged rent isn't allowable against tax at all.

And, yes, if you've got a big gain, by reducing the capital allowance to a pittance, the government has pretty much shafted you for CGT.


Quote from: goodlandlord on February 01, 2024, 10:11:08 AMwe have been undercharging the rent for these 14 years by 200 pounds

The level of rent you chose to charge is irrelevant. It has no bearing on the capital gain you have made from your property.

Did you rent the property for the entire time that you owned it or was it your main residence for part of that time?

If the latter, then you can claim Private Residents Relief (PRR) for the proportion of time it was your main residence. In addition, PRR is allowable for the final 9 months of ownership even if it wasn't your main residence at that time.

You can reduce the gain by the allowable costs of originally purchasing, and then selling, the property.
You can reduce the gain by the allowable costs of improving (not maintaining) the property.

If you are married/civil partnered, then you can create a Deed of Assignment to assign a percentage of the property to your partner and then complete a Form 17 Declaration of Beneficial Interests in Joint Property and Income' to notify the assignment to HMRC. You then have the benefit of two lots of CGT tax-free allowance.

The division between partners does not need to be 50/50. Work out the best % split to minimise the total CGT liability taking into account each partner's expected income in the tax year in which the property is sold.

All the info can be found on the CGT pages.


One of the reasons (there were several others) that Mrs Handyman and I got married when we did was to do the Deed of Assignment/Form 17 thing prior to selling two rented properties. It was good to lop several thousands off the CGT bill. We thought of it as nice wedding present from the tax man.