Capital Gains Tax

saintalan

silvercar wrote:

...In their own words:

http://www.hmrc.gov.uk/manuals/bimmanual/BIM45700.htm

example 2 illustrates the point.

Thanks Silvercar glad I asked!

So is this really a matter of timing. If you start to rent your own previous residence and move elsewhere, is the value that pertaining at that time. If you remortgage at that time, is the whole amount of interest eligible for relief?

Thanks

Alan

silvercar

the value when it entered the letting business. I have read some arguement that it is its value when it is first let rather than available for let, but hopefully that difference is a matter of days and not significant.

so you could remortgage and anything upto its value then would be eligible for relief.

As a point of interest, you don't have to have it all secured on that property - it could be secured on your new home or even unsecured. As long as there is reasonable evidence on paper that the loans were taken out to fund the letting business they should be allowable. So if you increased the mortgage on your own home to fund the deposit and then took a mortgage for the rest, apparently the interest on the deposit amount and the rental properties mortgage would be allowable expense.

MarkyMarkD

Indeed. Our BTL property is 100% owned (bought for cash) but the money was borrowed on our residential property. It was easier to do it that way at the time and it's still 100% tax relievable.

nomadgirl

WOW! Such a response! You are all so kind, thank you - just a few more clarifications.....neither property is mortgaged and I have never lived in the rented property, though the thought of moving back to Suffolk from West Wales is not without its attractions! Spouses - don't have one but working on it!!
The real reason I need to sort through all this is because I want to find the best way of raising money to carry out some major renovations on the property I now live in. Both properties are 150-200 years old.
I guess it's not really necessary to sell the rented one as I don't need that amount of money so raising a mortgage on one of them would probably be far more sensible, possibly on the rented one.
I need to be informed of all the options though, just in case of any "unexpected" occurences....you know, like the offspring needing major baling out!
Once again, many thanks to those who have replied already for sharing their wisdom and knowledge with me - and with each other too!!

gallygirl

Sorry to hijack thread OP but you seem pretty well sorted!

I have 2 CGT questions -

1. If OH transfers 1/2 a BTL property to me is he liable for CGT, and, if so, how should we judge the value of the property?

2. Am currently selling a BTL property. Is there a website somewhere I can calculate CGT due? I know a bit about various reliefs, but not sure what order to apply in etc, which makes a big difference. Or are there any kind souls out there who could help?

saintalan

nomadgirl wrote:

WOW! Such a response! ...
...Once again, many thanks to those who have replied already for sharing their wisdom and knowledge with me - and with each other too!!

Nomadgirl, you are welcome, you will always find that raising a point on any forum will always spark another query from others. There I was giving my bit and lo and behold I learn something which makes forums great and this is a particularly good one! So may I thank you for helping me!!

With regards your situation it looks like the easiest route is to borrow on one of the houses, I had not realised that it could be either of the properties to get Income Tax relief and I am sure one of the other contributors will guide you in a few minutes/hours.

Good luck

Alan

SteveCat

Capital gains is a sticky wicket for some, can i just reccomend these guys who have helped considerably with us in the past: http://www.propertytaxclub.co.uk/ For a period they provide free audio links and much, much more.

silvercar

ali007 wrote:

Sorry to hijack thread OP but you seem pretty well sorted!

I have 2 CGT questions -

1. If OH transfers 1/2 a BTL property to me is he liable for CGT, and, if so, how should we judge the value of the property?

2. Am currently selling a BTL property. Is there a website somewhere I can calculate CGT due? I know a bit about various reliefs, but not sure what order to apply in etc, which makes a big difference. Or are there any kind souls out there who could help?

1. if OH is married to you or you are both in a civil partnership, then the transfer is not subject to CGT. otherwise it would be.

2. post some figures and I'll have a stab at it.

gallygirl

Thanks silvercar. Not married, don't think even money saving can stretch that far :rotfl: :rotfl: :rotfl: .

OK, figures -

Bought May 1997 for £33,000
Sold Feb 2007 for £102,000
Owned for 118 months, BTL for 86 months (including void since Aug 06).
Purchase costs etc were £499 (don't suppose I can claim these as was bought as a private residence?)
Since Aug 06 property has been empty and I have been renovating it. £3627 including mortgage interest. Say 4k as some bills yet to come in. Not sure if best to claim here or as part of BTL declaration? As far as I am concerned BTL ended on 31st July.
Selling costs £2070.

Am a basic rate tax payer, no CGT allowance used this year. Total earnings this tax year, including net from BTL, will be around 37k. (yikes, where does it all go????)

Thanks in advance......

saintalan

Is there a formal or 'preferred' way of declaring this rental business to the IR?

Thanks

Alan