Capital Gains Tax up to 40%!

Blacklight

chucknorris wrote: »

But the problem is when you have owned them for far longer ie 19 years in my case, there is still a significant tax bill as the profit is larger and the effect of the pro-rata is reduced if as in my case I have rented out for far longer than living there.

Although obviously I ackowledge as problems go it's a nice one to have.

Hmmm, I see what you mean. You're right though, the larger the tax bill the fatter the wedge you end up with in your case so it's not a bad problem to have!

Main point still remains that is doesn't really impact on the BTL market as much as people think it might.

Thrugelmir

Blacklight wrote: »

I like the way everyone's suddenly in agreement that property purchase = capital gain.
Make your minds up.

In generic terms over an extended period of time house prices will rise. As income levels rise then the cost of a property will correspondingly rise. Inflation will see to that.

Property is a market so in shorter time frames 5 -15 years , interest rates, taxation policy, credit availability etc will cause fluctuation.

As with any investment timing of entry and exit from the market determines whether you are successful or not.

IveSeenTheLight

Blacklight wrote: »

£200k gain pro-rata over five years = £40k / year gain
Last 3 years are free so it's 2x £40k to pay tax on
You have £40k allowance, so for a married couple there's no tax to pay

Where do you see a £40k allowance.
Current CGT allowance is only £10,100 per person so £20,200 if jointly owned

http://www.hmrc.gov.uk/rates/cgt.htm#2

StevieJ

IveSeenTheLight wrote: »

Where do you see a £40k allowance.
Current CGT allowance is only £10,100 per person so £20,200 if jointly owned

http://www.hmrc.gov.uk/rates/cgt.htm#2

Is that for accidental landlords for a short period, Chucky mentioned something last night on here

Thrugelmir

Blacklight wrote: »

Main point still remains that is doesn't really impact on the BTL market as much as people think it might.

It impacts the market in the sense that better returns may be available elsewhere. People are like sheep they follow the flock. As it gives them confidence in their own decision.

Fortune favours the brave and those that take the risk when something is unfashionable. If you've made sizable profits then exiting quickly and then evaluating new opportunities isn't such a bad idea.

Or sitting on cash until the market adjusts then reinvesting.

IveSeenTheLight

StevieJ wrote: »

Is that for accidental landlords for a short period, Chucky mentioned something last night on here

Not as I understand it, but always open to being better informed.
If you know the link, please let me know

chucknorris

IveSeenTheLight wrote: »

Where do you see a £40k allowance.
Current CGT allowance is only £10,100 per person so £20,200 if jointly owned

http://www.hmrc.gov.uk/rates/cgt.htm#2

It's the 'letting relief' allowance when the property has at some point also been your main residence, this is in addition to the CGT allowance.

IveSeenTheLight

chucknorris wrote: »

It's the 'letting relief' allowance when the property has at some point also been your main residence, this is in addition to the CGT allowance.

Hmmm ok.
I do have one property let in which I previously lived there, although I do intend at some point to return to that property.

The other property I have let out has only solely been for letting purposes.

Do you have a link for the "letting relief"?

chucknorris

IveSeenTheLight wrote: »

Hmmm ok.
I do have one property let in which I previously lived there, although I do intend at some point to return to that property.

The other property I have let out has only solely been for letting purposes.

It would be financially advantageous if you could go and live in the other one rather than the one where you have already lived. But of course there might be logistical problems with that.

Just do a search on the Inland revenue site for the link

Thrugelmir

IveSeenTheLight wrote: »

You like to compare against the Eire example, however they have different set of allowances and a different CGT margin.

If you are going to compare, isn't it viable to understand all the impacts and not only one part

I'm looking at as a measure to increase tax revenues looking at the broader picture. As with CGT, there are loopholes in this part of tax legislation that have been exploited by those with capital to do so.