Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Iainhignell
    • By Iainhignell 12th Jul 17, 12:48 PM
    • 5Posts
    • 0Thanks
    Iainhignell
    Outstanding Mortgage and Capital Gains Tax - Can it be deducted?
    • #1
    • 12th Jul 17, 12:48 PM
    Outstanding Mortgage and Capital Gains Tax - Can it be deducted? 12th Jul 17 at 12:48 PM
    If a buy to let property still has an outstanding mortgage on it when it is sold does the amount outstanding get deducted in the CGT calculation? If so, can someone explain how?

    Thanks,
Page 1
    • kingstreet
    • By kingstreet 12th Jul 17, 12:52 PM
    • 31,567 Posts
    • 16,861 Thanks
    kingstreet
    • #2
    • 12th Jul 17, 12:52 PM
    • #2
    • 12th Jul 17, 12:52 PM
    No. It's the current value, minus the value at purchase or at the point the property was first let.

    If you once lived in the property, that period will be exempt so read up on this.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • G_M
    • By G_M 12th Jul 17, 12:52 PM
    • 40,090 Posts
    • 45,782 Thanks
    G_M
    • #3
    • 12th Jul 17, 12:52 PM
    • #3
    • 12th Jul 17, 12:52 PM
    No. The mortgage is not an allowable expense for CGT purposes.
    • Iainhignell
    • By Iainhignell 12th Jul 17, 12:58 PM
    • 5 Posts
    • 0 Thanks
    Iainhignell
    • #4
    • 12th Jul 17, 12:58 PM
    • #4
    • 12th Jul 17, 12:58 PM
    So for GCT purposes there is no advantage to having a mortgage verses owning the property outright?
    • saajan_12
    • By saajan_12 12th Jul 17, 3:13 PM
    • 557 Posts
    • 361 Thanks
    saajan_12
    • #5
    • 12th Jul 17, 3:13 PM
    • #5
    • 12th Jul 17, 3:13 PM
    Assuming you would count the mortgage at the point of sale as well as the point of purchase, it would likely mean MORE CGT, not less! You would consider the increase in your equity i.e. increase in propverty value and any capital paid off. The maths is (ignoring any renovations / capital improvements and any remortgages for simplicity)

    Final equity received - Starting deposit
    = (Sale price - Final mtg balance) - (Bought price - Starting mtg balance)
    = (Sale price - Bought price) + (Starting mtg balance - final mtg balance)
    = Increase in house price + Capital paid off mtg.

    CGT is actually based on the increase in house price. Looking at mortgages, the increase in equity would be the same or more than the increase in house price, so do you really want to pay a percentage of this to the tax man?
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,229Posts Today

7,301Users online

Martin's Twitter
  • Byebye! I'm about to stop work & twitter, to instead spend glorious time with Mrs & mini MSE. Wishing u a lovely summer. See u in 10 days.

  • WARNING Did you start Uni in or after 2012? The interest's rising to 6.1%; yet it doesnt work like you think. See https://t.co/IQ8f0Vyetu RT

  • RT @JanaBeee: @MartinSLewis Boris is the anomaly (coffee), the others are versions of normal (beer). Lots of same candidates = vote share d?

  • Follow Martin