Cgt On Second Homes

kalcevbro

Who is obliged to inform the Inland Revenue of a sale? Is it the vendor, solicitor, estate agent, land registry or bank receiving any proceeds from sale?
How does taper relief work? What else apart from major repairs is tax deductible?

silvercar

your obliged to pay any tax you owe to the inland revenue. You would normally fill in a tax return after the year end, declare any CGT owing and hand over the money. If you complete on a sale after 5 April 2006 the tax will be due by 31 January 2008; before 5 April 2006 and the tax becomes due 31 January 2007.

If you've rented property out then any mortgage interest can be out against rental income.

Ask the question on the Cutting Tax board.

Ian_W

As silvercar says, you're obligued to report it with your tax return but if you're tempted not to the IR have close links with Land Reg and large transfers into bank accounts may also attract attn.

Taper relief is explained in this HMCR FACTSHEET. A BTL property is considered a non-business asset, a furnished holiday let I believe qualifies for business taper relief.

Don't believe repairs count for tax relief but improvements which enhance the capital value do, new kitchens, bathrooms would fit the bill. Interest on your mortgage counts against revenue for income tax but not CGT. There may be other reliefs available but it depends on the circs, CGT is quite complex, so an accountant's advice may well save you more than their fees. You also get £8.5K [this year] CGT personal allowance which you can set against the gain, assuming no other capital gains during the year.

Meeten

I strongly rec that you get in touch with an accountant.

When selling our place, we were looking at a massive CGT bill (40k :rolleyes: ), but with the help of the accountant, that is reduced massivey as he showed me ways of getting taper relief, offsetting costs, and other 'accountancy' things.

It may cost some money to see the accountant, btu surely worthwhile in the long run ....

HTH

BobProperty

I'll go along with previous posts and say see an accountant. If you have worked the system on renting income as best you can, you will have claimed various expenses against the rental income as repairs and other major improvement / capital work can now be offset against the CGT. Just be careful not to claim the same thing twice, the IR will not like that if they spot it. There may be an advantage to being married at time of disposal, your accountant should ask about that. You can gift half the property to your wife/husband prior to the sale, so that you use both CGT exemptions.