When do I tell Hector to take his dosh ?

Merlin_of_Altofts

Dear All,

I am hopefully on course to sell a secondary property which I bought just over 6 years ago as an investment. It has done well but after calculating the buying & selling expenses, Taper relief and my wife and my own exemptions, we still have a decent £11K capital gains tax bill to pay.
I have enhanced the property by having it fully decorated and I think that will add to the expenditure but will not reduce the tax bill by much overall and now seek to ask three questions from you learned people out there -
1) Is there anything else that I can consider to reduce my bill further ?
2) As I am self employed and my yearly accounts run from January to end of December, when am I likely to have to pay this amount ?
3) If I have CGT amnesia, how would IR be informed of my gain if not by me, ? Solicitor ? Land registry?

Many thanks

Merlin.

roswell

If you moved into it for some time before you sold it ..... it would be your primary residancy.

clutton_2

some of your initial buying costs can be offset on sale to mitigate CGT - check with your accountant or IR - things like solicitors fees, and capital expenditure costs on the property i think.

cookie9

As the last reply stated your intial expnese are all deductable. Please note the CGT is also indexed linked so you may benefit from that as well.

silvercar

The event leading to the CGT liability is the sale of the property. If the completion date was in the 2006/07 tax year, you would include it in your tax return 2006/07; paying the tax, according to current rules, by 31 January 2008.

a010454

3) If I have CGT amnesia, how would IR be informed of my gain if not by me, ? Solicitor ? Land registry?

What is the answer to this as I have always wondered myself/

BobProperty

a010454 wrote:

3) If I have CGT amnesia, how would IR be informed of my gain if not by me, ? Solicitor ? Land registry?

What is the answer to this as I have always wondered myself/

Land Registry, Stamp Duty return and the fact that the rent has stopped coming in (you were putting it on a tax return, weren't you?)
The OP needs to work with his accountant to minimise his SE income in the year that he make the capital gain.

Ian_W

BobProperty wrote:

Land Registry, Stamp Duty return and the fact that the rent has stopped coming in (you were putting it on a tax return, weren't you?)

Quite, Bob. Not exactly a surreptitious little "cash in hand" jobby selling a property. It leaves quite a nice audit trail for the Revenue if you did have a memory lapse. :rolleyes:

It may be they wouldn't cotton on - but the penalties are up to 100% of the tax owed plus interest and it's doubtful they'd confine themselves to the unpaid CGT and would probably do a full enquiry into that year and possibly earlier years of your tax affairs.:eek: You couldn't really blame them for being suspicious about your other tax returns if they caught you failing to declare what could be a fairly substantial wodge of tax, now could you?

Your call though!

dunstonh

The new rules coming in April will give an increased audit trail as well as that will record purchase price, sale price and rental as well. Whilst the new rules are being touted as helping tenants, many see it is helping the HMRC even more.