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How much capital gains tax do I pay on a second home I once lived in?

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Could you possibly advise me on selling a property and if I may incur capital gains tax as I am a little confused over my situation.

I bought another property eight years ago in June 2014 and moved into it. My son has been living in my previous home since then rent free.

I originally purchased the property in 2001 for £50,000 and have spent around £30,000 improving it. The present value is about £210,000. 

Would this incur any capital gains tax if I sell it after owning it for 21 years? BT

We take a look at how much tax needs to paid on the sale of a second property

We take a look at how much tax needs to paid on the sale of a second property

MailOnline’s Property expert Myra Butterworth replies: If you own a second property, you will liable for capital gains tax on any profits when you sell.

However, how much tax you end up paying will depend on your circumstances, as there are reliefs available as well as capital losses that can be offset against any tax due.

We speak to a leading accountant about how much tax is due in your case. 

Stefanie Tremain, of accountants Blick Rothenberg, said: I understand that you own two properties. The first was purchased in 2001 for £50,000, which you lived in as your main residence until 2014, at which time you moved into the second newly purchased property. 

Your son has lived in the first property since 2014 and you are now thinking of selling that property.

As a starting point, your capital gain on sale would be calculated based on the sale proceeds – less any allowable costs of sale such as legal fees – less your original acquisition cost.

Allowable costs of purchase can also be deducted, including professional fees and Stamp Duty Land Tax.

You can also deduct the cost of any capital improvements you have made to the property, provided the improvement is still reflected in the value of the property when it is sold.

For example, if you put a new kitchen in soon after moving in and fully refurbished the kitchen in 2019, only the cost of the second kitchen would be an allowable cost on sale.

It is important that receipts for improvement costs can be shown should HMRC enquire into the amounts claimed.

Assuming the £30,000 refurbishment costs are fully allowable, your potential capital gain on sale would be £130,000. This is the estimated proceeds of £210,000, less cost of £50,000 and less improvement costs of £30,000.

The next thing to consider is main residence relief, which reduces the taxable capital gain realised on the sale of a property that has at some point been your main home.

Where a property has been your main home throughout the period you have owned it, any capital gain on sale is fully exempt from capital gains tax.

As you have occupied the property as your main residence for part of the time you have owned it, a proportion of the capital gain should qualify for relief.

You have owned the property for a total of 21 years and the property was your main residence for 13 years, from 2001 to 2014.

The last nine months of ownership qualify for relief by concession which means that, in total, around 65 per cent of any gain may be exempt from capital gains tax. This would leave a chargeable gain of around £45,500.

Assuming you do not have any other gains realised in the tax year of the sale you should have an annual exemption – currently £12,300 – available to offset against the gain, which would leave a taxable gain of £33,200.

You can also offset any capital losses realised in the same year or brought forward from previous tax years.

The net gain would be taxed at the higher capital gains tax rates for residential property, which are currently 18 per cent or 28 per cent, depending on the level of your taxable income.

The estimated capital gains tax liability arising on a gain of £33,200 taxed at the highest rate would be £9,296.

The capital gain would need to be reported to HMRC within 60 days of completion of the sale by submitting a capital gains tax return, and any capital gains tax due would also be payable by this date.

You would also need to report the sale on your self assessment tax return for the year of the sale.

If the house is sold in the current year – 2022/23 – the tax return reporting the sale would be due by 31 January 2024.

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Bluewater grows its entertainment offer (GB)

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Landsec has announced the opening of a third ‘UK first’ attraction at Bluewater, Kent as the destination expands its partnership with Hangloose Adventures. Skydive, a free-fall experience not found anywhere else in Europe, and the UK’s only outdoor skydive machine has opened at the centre. It follows on from Europe’s biggest purpose-built giant swing, standing at 46-metre tall, which opened at Bluewater earlier this month.  

 

The announcement builds on a successful first year for Hangloose’s initial attraction Skywire, the longest zip wire in England, which has welcomed 30,000 guests since launching at Bluewater last June. Landsec will continue to work with Hangloose to expand its offering, with up to five more experiences set to open at the centre by 2024: a bungee tower, giant slide, clip and climb, waterdrop boulding wall, and Via Ferrata, a route-marked climb using metal rails and rungs embedded in Bluewater’s cliff walls.

 

Mark Warne, Brand Account Director F&B and Leisure at Landsec commented: “Delivering new experiences which are unique to Bluewater is central to our overall offer for guests. Hangloose’s innovative concept raises the bar when it comes to leisure attractions and draws guests from across the UK to Kent. By partnering with Hangloose to grow their business and create shared value, we’ll be able to give guests even more exciting experiences every time they visit.”

 

Brian Phelps, MD of Hangloose Adventure, said: “Since the beginning, we’ve worked closely with Landsec to grow our leisure concept and drive performance, putting us in a unique position where we’re able to expand our offer after only a year. We’ve enjoyed great success at Bluewater so far and are already thinking about how we can provide even bigger and better experiences in the future.”

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Author with immaculate house offers ten tips for a clean home

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Is this the secret to NEVER having to clean? Houseproud author claims she saves hours by sticking to a ten-step mantra – including banning chairs in bedrooms, wiping as you cook and only ironing shirts and dresses

  • UK writer Natali Juste Simmonds says she’s cracked keeping a home clean, by sticking to a few simple ground rules – and making sure family members comply
  • She shared top ten tips for keeping a home spotless with her 20,000 followers
  • Among them are ditching a toilet brush in the bathroom, not having a chair in the bedroom and cleaning  the kitchen while you cook

A houseproud author has revealed her ten essential tips for keeping a house spotless – saying simple ground rules for family members and cleaning as you go means never wasting time on dull chores. 

Writer Natali Juste Simmonds, who was born in the UK but now lives in the Netherlands, penned her top ways to keep on top of cleaning on Twitter, saying she has time to focus on her writing because she follows her own advice about dodging ‘thankless’ cleaning tasks. 

The author of a series of paranormal romance novels told her 20,000 followers on Twitter: ‘I know so many people who spend hours cleaning up after their family every day, but I refuse to. 

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UK writer Natali Juste Simmonds says she's cracked keeping a home clean, by sticking to a few simple ground rules - and making sure family members comply

UK writer Natali Juste Simmonds says she’s cracked keeping a home clean, by sticking to a few simple ground rules – and making sure family members comply

‘It’s boring and thankless. I prefer to write. Yet my house is spotless. Here are 10 ways to keep on top of s*** so you don’t have to clean for hours.’ 

Sharing her ‘tough love’ mantra, she said that the key to keeping a home clean is making sure every family member is engaged, saying learning how to tidy is a lifeskill that everyone needs – and no-one should get away with not doing it. 

Natali wrote: ‘Train everyone in the house to do the following (cats are the exception). After a while these habits will become routine, but you MUST stick to them and make sure no one is let off the hook.’ 

Among the tips are filling a bag with things that are in the wrong place at the end of every day and placing them back where they belong. 

Tidy home, tidy mind: The Netherlands-based writer shared her top ten tips for keeping a home spotless with her 20,000 followers on Twitter - saying that making sure everyone in the house pulls their weight is key (Pictured: An office area in Simmonds' home)

Tidy home, tidy mind: The Netherlands-based writer shared her top ten tips for keeping a home spotless with her 20,000 followers on Twitter – saying that making sure everyone in the house pulls their weight is key (Pictured: An office area in Simmonds’ home)

The writer also claims having a toilet brush doesn’t help keep a loo clean and dousing it with bleach instead is a more reliable way to ensure it’s sparkling. 

And getting used to wiping down mirrors after using a sink also helps, she claims, writing: ‘Keep a dry cloth next to the bathroom sink. Every time someone uses the taps or brushes their teeth, wipe down the counter and mirror. Takes literally 2 seconds. No cleaning toothpaste stains off counters.’

Teaching kids to pull their weight around the house is key to success, and equality reigns supreme in the Simmonds house. 

Among her top tips are ditching a toilet brush in the bathroom - using just bleach instead; not having a chair in the bedroom - to prevent people leaving clothes on them - and cleaning the kitchen while you cook (Pictured: Simmonds' very tidy office)

Among her top tips are ditching a toilet brush in the bathroom – using just bleach instead; not having a chair in the bedroom – to prevent people leaving clothes on them – and cleaning the kitchen while you cook (Pictured: Simmonds’ very tidy office)

‘If one kid lays the table, the other clears. If one hangs out the washing, the other collects. I don’t say “I need help with dinner” I say “who will chop the veg and who will wash up?” Its called a presumed close. I have no option, why should others in my house?’

The author, who has written books including the Indigo Chronicles trilogy and the Blood Web series, admits that having a cleaner is still useful…because they can help keep on top of areas where grime quickly builds, including fridges and ovens – but she suggests ditching a takeaway a week to cover the cost. 

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DIA Group closes 25 Minipreco stores in Portugal

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DIA Group has closed 25 Minipreco stores in Portugal, resulting in the loss of approximately 159 jobs. The retailer said the closures are the result of ‘the effort to adapt, modernise and balance the operations of DIA Portugal, with the aim of better preparing the company for current and future challenges arising from the current economic situation in the country,’ according to media reports. In the last two years, the multinational company operating in Spain, Portugal, Brazil, and Argentina, accumulated losses of over €620m.

 

In Portugal, net sales reached €283.1m in the first half, 4.5% below the €296.3m generated in the same period last year, due to the reduction of stores and mobility restrictions. DIA Group confirmed its intention to continue to invest in Portugal. The company hopes to adjust its operation to the current reality in order to ensure the future success of the company.

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