CGT on BTL disposal

Kenny4315

Thinking of disposing of a BTL property, as longer term it's not ideal property for the purpose, got the general overview of

Sale Price
less Purchase price
less purchasing costs
less capital costs
less selling costs

equals capital gain

less capital allowance (£10,600)

equals taxable gain

(works out to a £100k taxable gain as an approxiamation, joint ownership so £50k each, wife & me)

these 18% and 28% thresholds are less clear, especially if gain moves your bracket. Income wise lower rate tax payer, but a £50k gain would move brackets. Example, calculation would be useful. Income levels are at £12k pa level each as rough guide.

Can any tax relief be obtained as I'm hoping to use some of the cash to buy a more managable btl property/properties.

cte1111

You and your wife will each have a capital allowance, i.e. you take the total capital gain, then split it between you and your wife, then each knock off £10,600.

The amount that falls in your basic rate band will be taxed at 18%, the remainder will be taxed at 28%. i.e. if you have £20,000 of your basic rate band, then that will be taxed at 18%, the remaining £30,000 (say) will be taxed at 28%.

CLAPTON

gain per person is 50k
less 10,600 allowance
so net gain is 38,400 per person

if you earn 12k then
7475 is tax free
so you have used 12,000 -7475 of your 35,000 20% allowance i.e you have 30,475 of the gain taxed at 18% i.e. tax 5,485.5
and 7,925 taxed at 28% i.e. 2,219
so total tax payable per person is 7,704.50


I am of course assuming you never lived there as your principal residence

mlz1413

Is B2L considered a trade? I know it is considered a business but in my own mind doubt that it will fall into 'trading'.

I just wondered if rollover relief could be considered as Kenny wishes to re-invest?

jamesd

If it has ever been the principal residence of either of you then you also need to consider letting relief and private residence relief.