Property Taxation

Question 1

What is capital gains tax charged on

Answer 1

Gains made on chargeable assets, includes freehold and leasehold property, and interests of co-owners in the case of jointly owned property.

Payments made for the release or modification of an easement of covenant.

Gifts.

Question 2

How is capital gains tax calculated?

Answer 2

Deducting the purchase price of the property from its current sale price.

Certain forms of expenditure incurred in acquiring for improving the property can also be deducted.

Question 3

Principal private residence relief

Answer 3

Gains made on the disposal by sale or by gift of an individual’s dwelling house used as his only or main residence (including grounds of up to 0.5 hectares) are exempt from CGT (Taxation of Chargeable Gains Act 1992, s222)

Question 4

Qualifying conditions for principal private residence relief

Answer 4

Can make an election within two years of acquiring a second property.

S223 Taxation of Chargeble Gains Act 1992- absences which are disregarded are last 18 months, first 12 months, any period(s) not exceeding three years, any periods working outside the UK or any periods prevented from living in his dwelling due to being employed elsewhere

Question 5

CGT Letting the property

Answer 5

Charged on gains over £40,000

Question 6

CGT married couples and civil partnerships

Answer 6

Only one relief is available- where couples own more than one house, they must choose which property is to take the benefit of the relief.

Question 7

What is SDLT charged on and when

Answer 7

Property transactions, freehold and leasehold, residential and commercial.

Payable to HMRC within 14 days of completion.

Question 8

Exemptions and reliefs from SDLT

Answer 8

First home for less than £500,000, 0% up to £300,000, 5% there after.

Property left in will or is transferred following a divorce or dissolution.

Apportionment for chattels.

Question 9

What should you advise the client on SDLT

Answer 9

-their responsibility to notify of the liability of tax
-your need for information from them to complete LTR
-penalties for late submission of LTR
-their liability to pay tax (joint and several)
-possibility of enquiry after the filing date and additional responsibility for costs of dealing with enquiry
-need to pay any difference in tax after enquiry
-retain documents for 6 years