Do i have to pay Capital Gains Tax?

cd10

Hi

i purchased a property off plan in 2006 and the building has only just completed, 2 years over the deadline! Initially i was going to move into the apartment but since then i bought a nice house and now i dont want to move into the apartment so i need to sell it.

My question is will i pay capital gains tax on the apartment? i am aware that any profit made after £10,100 is taxed at 18% but i also put a hefty deposit down, £25,500 will i have to pay capital gains tax on this as well or is it just the profit made after the deposit has been taken out?

Last question if i do have to pay capital gains tax any ideas of how i could avoid it?

Thanks in advance!!!

Old_Git

you will have to pay CGT on any profit after your £10,100 allowance and expenses such as solicitor, estate agent .
If you bought off plan in 2006 at the height off the boom ,and you sell in 2010 you will be lucky to make and profit .

Radiantsoul

The gain is the price paid(inc deposit) less the price paid. You can deduct all costs such as solicitors fees and stamp duty.

If you have a reasonable large potential tax liability then consult a tax advisory. Otherwise just pay it...

cd10

i hope im not sounding like a complete 'numpty' so basically i have to pay capital gains tax on the deposit i put in and not just the gain? bit confused as i have already paid income tax on the deposit i put! can you take away solicitor fees, service charges and estate agent fees from the captial gains tax bill?

ET1976

Forget about the deposit - you pay tax on the gain, if there is any.

Say you bought it for £100k and sold it for £150k (figures for illustration only...) the gain would be £50k, so you would pay CGT on £50k (less your CGT allowance and the other deductible miscellany mentioned above).

Fire_Fox

Are you confident there is a profit to pay capital gains tax on?

mlz1413

cd10 wrote: »

Hi

Last question if i do have to pay capital gains tax any ideas of how i could avoid it?

Thanks in advance!!!

If you move into the flat as a princple private residence then you don't pay GCT when you sell. So the best way to not have a CGT is move in!

I would though seek the advice of a tax accountant as they will be able to advise you on your personal situation.

cd10

thanks for the replies!

not sure if there will be a profit but was just wondering if i would have to pay anything! good news that i only pay after deposits, service charges, solicitor fees etc have been taken out!

last question is it possible to live in 2 places while its up for sale? the apartment is roughly 25 miles away from my main home and i work litterally 5 mins from the apartment. it would be easier to stay there in the week than come home due to the traveling. would this potentially mean i can reduce my capital gains tax?

Fire_Fox

Have you spoken to the inland revenue? They are normally very helpful. You can't have two primary residences, your primary residence tends to be where all your post goes and where most of your belongings are kept. You might try letting your other house for six months whilst you live in and attempt to sell the flat?

A thought ... there have been threads before where banks have been unwilling to lend on properties that have not been owned for six months or more so you may need to hold onto the flat for a while, run a search on the boards.