Capital Gains Tax up to 40%!

chucky

chucky wrote: »

not really - there are ways round it.

set up a Ltd Co specifically for property management, transfer the properties to the Ltd Co from your name. there is a way of doing this and not paying stamp duty - you would need legal advice from a solicitor on this to make sure it is ok because you may not be able to take out a mortgage on the property if it isn't done properly i believe.

set yourself and wife up as a director; pay yourself a low salary £10k and take the rest in dividends and not having to pay National Insurance.

avoid the capital gains increase and avoide any income tax rises.

in addition to this there's this scenario too that I'm not totally sure works but worth consulting with your accountant...

have the Ltd Co make losses (have the properties empty whilst you sell maybe or whatever the accountant advises) which can then be offset against any gains from any capital gains when you go to sell.

StevieJ

silvercar wrote: »

Assuming you have gains. Isn't everyone saying that these BTLS aren't showing a profit? No profit, no gain, no CGT.

I was talking about shares, plenty of gains over the past year.

chucknorris

StevieJ wrote: »

You still can Bed and Isa, It becomes much more relevant to utilise your ISA allowance now and yes of course crystallise your gains each year.

Yes I always use my full ISA alowance I was talking about investing outside of an ISA. As almost all of my shares are FTSE trackers what you can do is sell one tracker and buy another (not the 'exact' same one). Although most of my trackers are already in ISA's. I am a very small player in non ISA shares as I only have 15k in a non ISA tracker so I don't think I need worry about hitting the 10k CGT allowance soon unfortunately. Although due to the low returns on savings it's not unlikley that I may invest more as my savings bonds mature.

chucknorris

silvercar wrote: »

Assuming you have gains. Isn't everyone saying that these BTLS aren't showing a profit? No profit, no gain, no CGT.

Depends when you bought, I bought in the early 90's.

Vincenzo

chucky wrote: »

not really - there are ways round it.

set up a Ltd Co specifically for property management, transfer the properties to the Ltd Co from your name. there is a way of doing this and not paying stamp duty - you would need legal advice from a solicitor on this to make sure it is ok because you may not be able to take out a mortgage on the property if it isn't done properly i believe.

set yourself and wife up as a director; pay yourself a low salary £10k and take the rest in dividends and not having to pay National Insurance.

avoid the capital gains increase and avoide any income tax rises.

I would be interested to know how you could legally avoid paying stamp duty in this scenario? My experience is that you cannot.

Vincenzo

chucky wrote: »

in addition to this there's this scenario too that I'm not totally sure works but worth consulting with your accountant...

have the Ltd Co make losses (have the properties empty whilst you sell maybe or whatever the accountant advises) which can then be offset against any gains from any capital gains when you go to sell.

I don't see how it makes sense to intentionally reduce your profits to avoid tax. I would rather have the remaining 60% after tax than choose to give up 100%!

A good accountant should be making the most of any allowances and offset costs against profits etc...

chucknorris

This is probably a crazy idea but at the moment I can't see the probable flaw in it, I'm probably missing something obvious. As my wife also owns investment property (I know this sounds daft) but if I was to buy 10% of her property each year and likewise she does the same. Then it would be under the stamp duty threshold and also under the CGT tax allowance each year. There must be something wrong though, I can't imagine it could be that simple.

When you buy a share in a property do you pay stamp duty on the full price, or only the share that you are actually buying?

silvercar

Transfers between spouses are fine, but you are deemed to have acquired the property at the oringinal price and date. No stamp duty AFAIK. All you would be doing is putting the properties into joint names.

chucky

Vincenzo wrote: »

I would be interested to know how you could legally avoid paying stamp duty in this scenario? My experience is that you cannot.

i guess paying for the right solicitor would be the way to do it.

what happens when properties are given as gifts?
do you pay stamp duty?

Pete111

chucknorris wrote: »

I have in fact already lived in 3 of my 5 investment properties. But that's not how it works Hamish, if you sell a house that has been both your main residence AND has been rented out you then claim 'letting relief'. This allows you an additional 40k allowance and you can 'pro rata' the profit down for the years that you lived there plus the last 3 years in addition, so although it does have a significant effect, it does not make it tax free.

QUOTE]

CN you seem to be up to speed re this - can you give me your views on the following scenario pls?

Flat bought by me and my then girlfriend (now wife) on a joint basis in 2004 for 250k

We lived in it for 3.5 years until sept 2007, since when we have rented it out for a net profit of approx 2k per annum

We are potentially (depending on the market) looking to sell this time next year. I would hope to get 350k for it (looking at similar 2010 sale prices and assuming no fresh crash!)

Assuming a 100k gain and there being 3.5 years since we moved out - what sort of CGT bill (if any) are we looking at if CGT is 40%. Also, would we be able to make use of lettings allowance?

Any thoughts much appreciated!

P