Advice Needed - Quickly

ms_newbie

I am selling a flat i purchased last year - not my main residence. The price agreed will use up my Capital Gains Allowance for the year and as a high rate tax payer the balance will be taxed at 40%. Although I dont enjoy paying tax, I am prepared to pay whats due on my gain.

The purchaser wants to pay a higher price and have a cash back scenario. In principal I dont have a problem with this. However he doesnt want the cashback included in the missives as he feels his lender will not look upon this favourably. Is there another way to do this so that i dont end up liable for the CGT over and above what I am already due to pay. IE we had agreed a price of £110k and now he has it surveyed at £125k and he wants to pay this and get £15k cashback. I dont want to end up owing 40% of this £15k to taxman. Whats the best way round it?

Thanks.

reddevilled

I would have said that you would be able to deduct the cashback from the sale proceeds, therefore only paying tax on the actual gain. This is the common sense approach which in the majority of cases is the correct one.

So I would disclose it on your tax return as :

Sale proceeds £125k
Less: cashback to purchaser £(15k)
Less: costs of sale £X

Net sale proceeds profit £X

Less: original cost £(X)

Net gain £X

silvercar

If the property is worth £110,000 sell it for £110,000. If its worth £125,000 sell it for £125,000.
jimmo

The only other option I would consider is selling for 125,000 with a gifted deposit of 15,000. But this would have to be declared in the missives and to the buyers mortgage lender. Some lenders would be happy with this, some wouldn't.

Anything else is far too dodgy and should be avoided.