Advice on Capital Gains Tax if you don't live in the place you're selling?

Sharon333

Hi Guys

Can anyone shed light on the minefield that seems to to be CGT? I have a property which is near exchange & completion -I am selling it for the same price I bought it for in 2004. I lived in it until mid 2006, though it is not my main residence now, I currently rent a house with my husband in another part of the country. The property being sold has been empty since July 2009, and I have been paying the mortgage on it it as well as the rent on the place I live in - before that I did rent it out, but not out of choice, the market has been so bad it was rent it or lose it! - do I still have to pay CGT now that a sale is going through? I did not tell the lender I was renting it out, hoping it would only be short term and I could then sell it, so all paperwork show it being a residential buy as that is what it was when I bought it. I don't see that I am making any money, as I am selling it for what I bought it for, and especially as I have used all my savings (which would include any paltry amount made from rental income) paying the mortgage while the sale(s) have gone through - but am I being naive? Thx!

DVardysShadow

Sharon333 wrote: »

Hi Guys

Can anyone shed light on the minefield that seems to to be CGT? I have a property which is near exchange & completion -I am selling it for the same price I bought it for in 2004. I lived in it until mid 2006, though it is not my main residence now, I currently rent a house with my husband in another part of the country. The property being sold has been empty since July 2009, and I have been paying the mortgage on it it as well as the rent on the place I live in - before that I did rent it out, but not out of choice, the market has been so bad it was rent it or lose it! - do I still have to pay CGT now that a sale is going through? I did not tell the lender I was renting it out, hoping it would only be short term and I could then sell it, so all paperwork show it being a residential buy as that is what it was when I bought it. I don't see that I am making any money, as I am selling it for what I bought it for, and especially as I have used all my savings (which would include any paltry amount made from rental income) paying the mortgage while the sale(s) have gone through - but am I being naive? Thx!

CGT stands for Capital Gains Tax. You only pay it if you make a Capital Gain. You do not appear to have done so.

SouthCoast

When you do your Self Assessment tax return for 2009/20010 or 2010/2011 if the property is sold in that tax year, you will be able to explain the position to HMRC under these categories:

UK Property: Did you receive any income from UK property.

Capital Gains Summary: Did you dispose of any chargeable assts, .............

sunshinetours

The CGT issue is covered above.

You were renting it out - did you declare any net rental income on your tax return previously? You may not have been making a "profit" each month once you paid your mortgage but for tax purposes you only get to deduct frvom the rent, the interest element of a mortgage (not the capital repayment part) along with other allowable expenses so you may have unwittingly made a small taxable profit on that

If above is applicable consider disclosing and getting that settled rather than face a tax enquiry going forward

G_M

-I am selling it for the same price I bought it for in 2004

Then there is no 'capital gain' is there?

As explained above, there may have been an income tax liability in the past from the rental income, but you've been declaring that already.... haven't you.....??

mlz1413

If the property is being sold for the same as it was purchased for then with fees added onto original purchase price and deducted from sell price then would there be a loss that could be declared?

Can losses be rolled forward against future capital gains?

Jowo_2

There's a tax forum on landlordzone which has members who are skilled and experienced in calculating CGT and offering expert advice.

sunshinetours

mlz1413 wrote: »

If the property is being sold for the same as it was purchased for then with fees added onto original purchase price and deducted from sell price then would there be a loss that could be declared?

Can losses be rolled forward against future capital gains?

Yes - may be worth doing