Capital Gains Tax

sue.williams_2

In 1987 my husband and I were given land by his parents, the land was valued then at £57000. We have now sold the land for £210000 to purchase a house which we plan to rent out, we already have 4 other properties that we rent out, these rental lettings are now a large part of our income.

As we had rolled the money immediately onto a property we have been shocked to be told we now have Captial Gains of nearly £30000 to pay. We don't have anything like that kind of spare cash and will have to sell one of our properties to cover this unexpected cost.

Is this correct? and if we sell one of our properties to pay this tax bill will we receive another similar bill next year if the property we sell also makes more than its original puchase price?

Thanks

Londonboy_3

The CGT on the land is definitely payable unfortunately. Any sale of another property other than your main residence will also trigger a liability to capital gains tax to the extent that the sale proceeds exceed the purchase price. You and your husband both get an annual CGT allowance of just under £10k per annum and any gain (if you own jointly) should be split 50:50 between you, so if you havent sold anything else since 6 April and the gain is less than 20k, and you sell nothing else for a profit between now and 5 april 2010, you might not have any CGT to pay.

RobertoMoir

Do you have an accountant? If so, were they drunk at their desk when you discussed this with them? This is pretty much the classic capital gains tax scenario, so I'm a little shocked that you're surprised by it.

jonesMUFCforever

Did you want to raise the money by using a credit card?

If not this is on the wrong thread and you may get better responses on the tax board.