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Tax on house sale
dazzer21
Posts: 74 Forumite
I wonder if anyone here can place a ballpark on this before I investigate further.
I have a house (house 1) that I bought in 1997 which I lived in as my main residence until July 2005. I then moved to a larger property (house 2) but kept the original one on as a rental concern.
Cutting long stories short, I now want to offload house 1 as obviously it is now worth a lot more, plus we could really do with the equity right now. So, with the fact that the house is now going on the market for 195k, is there a quick and easy calculation that can be done with regards to what all the tax liability on the sale is going to be? The mortgage on it is currently 130k.
I'm assuming that income tax will play a part (even though I have made a loss on the rent as, all things considered (we used a management agency), the upkeep of the place was around a tenner a month more than the income). I am not entirely sure what the situation with regards to Capital Gains would be - the main reason I endeavoured to rent house 1 out was because I was under the impression that, because it was my main residence in the first place, there would be some sort of examption.
I'll be looking at some sort of penalty on paying off the mortgage early, no doubt, but I will look to see if ML has any demon ways of making that as painless as possible. A possible upsode at the moment is that our tenant seems quite interested in staking a claim on the place, so a quick sale and no agent's fees can only be a good thing.
However, as I mentioned, it would be nice to know just how much wedge I'd be likely to see before we re-structure our lives around this so if anyone has any ideas, your input will be much appreciated.
Many thanks in advance
Dazzer21
I have a house (house 1) that I bought in 1997 which I lived in as my main residence until July 2005. I then moved to a larger property (house 2) but kept the original one on as a rental concern.
Cutting long stories short, I now want to offload house 1 as obviously it is now worth a lot more, plus we could really do with the equity right now. So, with the fact that the house is now going on the market for 195k, is there a quick and easy calculation that can be done with regards to what all the tax liability on the sale is going to be? The mortgage on it is currently 130k.
I'm assuming that income tax will play a part (even though I have made a loss on the rent as, all things considered (we used a management agency), the upkeep of the place was around a tenner a month more than the income). I am not entirely sure what the situation with regards to Capital Gains would be - the main reason I endeavoured to rent house 1 out was because I was under the impression that, because it was my main residence in the first place, there would be some sort of examption.
I'll be looking at some sort of penalty on paying off the mortgage early, no doubt, but I will look to see if ML has any demon ways of making that as painless as possible. A possible upsode at the moment is that our tenant seems quite interested in staking a claim on the place, so a quick sale and no agent's fees can only be a good thing.
However, as I mentioned, it would be nice to know just how much wedge I'd be likely to see before we re-structure our lives around this so if anyone has any ideas, your input will be much appreciated.
Many thanks in advance
Dazzer21
0
Comments
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If you sell a house within three years of it being your main residence then there is no tax to pay on the profits from the sale.
It's all yours
Everything that is supposed to be in heaven is already here on earth.
0 -
As you should have been self assesment (due to rental income) you will need to declare the sale on your tax return even though there will be no tax to pay.0
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