Q. My Wife and I Lived in Our Joint-Owned Property for 12 Years and It is Now Let it Out, but We Plan to Sell it in Two Years Time. What will be the Impact of Capital Gains Tax on that Sale?
A. When you sell the property you need to calculate the gain made, being the difference between the sales and purchase price after deducting selling/ purchase costs in each case, including stamp duty land tax paid on purchase. Let‘s assume the capital gain made on the property will be £180,000.
If you own the property for exactly 15 years: 180 months, you will make an average gain of £1,000 per month. The period you lived in the property as your main home (12 years: 144 months) and the last 9 months are free of CGT: 153 months: £153,000.
Your taxable gain is £27,000 (180,000 – 153,000). As you owned the property jointly (presumably 50: 50), you have £13,500 of gains each. There is no deduction for a period of letting after you have moved out.
If you were selling the property before 6 April 2023 that gain would be mostly covered by your individual annual exemptions of £12,300. But this exempt amount is cut to £6,000 in 2023/24 and cut again to £3,000 in 2024/25.
If you sell in 2024/25 you will each have to pay CGT on £10,500 (13,500 – 3000).
