some advise please capital gains tax

bindiboo

hi this is the situation

my hubby currently works full time. He and his brother own 2 properties which are rented out. (not ppr) for these properies, I complete a self assessment each year.

My hubby also owns another property which is not ppr. He bought this property about 3 years ago dirt cheap as it needed alot of work doing to it. The property is now in reasonable condition now. He is now at the solictor stage of selling this property.

What we wanted to know is, the property when sold would have created a potential profit of £40000. (selling price, less cost and works etc)

I know that he would have an allowance of £8000 something. How much cgt would he have to pay ont he remaining £32000. Also are there any loopholes etc that we could try to reduce the amount of tax we would need to pay.


I know you guys will help:D

tom188

Depending on his tax situation up to 40% ie £12800 CGT. If he has nearly sold it probably not much can do to avoid, though if it had been in joint names you could have both used your tax allowances for the year.

bindiboo

kept telling him to put into joint names to earn the extra allowance. We could still do that if we pull out of the sale now as solictor said it would take a furhter 2 weeks to do this..

if thsi is any indication. his last self assessment, he paid tax of around £1400 after his paye. would this mean it would definately be 40%?

Cook_County

If the property was bought with the intention of renovating & selling then this is a trading profit, not a capital gain.

tom188

If hes in employment and has to pay extra tax through a tax return at the end of the year he is higher rate tax payer.

Cook_County

Well - he is definitely a higher rate taxpayer in the year of sale because he has £40,000 of trading profit plus his salaried earnings.