Remortgaging to avoid CGT?

pands_2

We bought a house recently and renovated it. We plan to sell it on for a profit which could be in the region of £50k. Assuming the valuation comes in at the level we are expecting, can we re-mortgage the house for the new, full amount, then sell it? We wondered whether this is frowned on by the Inland Revenue or perfectly legal, as we would obviously escape paying any Capital Gains Tax. We may have to do this anyway, if we don't sell it immediately, in order to pay the mortgage for the next few months. Obviously the tax liability is much larger than the early mortgage redemption penalty.

dougk_2

I would not have thought this would work. Its based on the price you paid not the mortgage amount.

stratford_2

I agree with dougk. I assume the property is not your main residence as if it is it would be free of CGT anyway.

simonjfisher

Sorry but Capital Gains Tax is based on the profit and not related to the mortgage amount.

The only way to avoid the tax is to live there as your main home and then you can move back into your own property when it's sold.