Capital Gains tax

Mojisola

goalhanger wrote: »

This house is also going to make up my pension as I'm self employed.

So, at some point, you're going to sell it to release the capital? Make sure you keep track of how much GCT you'll have to pay at that point so that it doesn't come as a shock then.

goalhanger

I'm already in shock , as I was under the impression there were some ways to offset the amount of CGT . I dont want to sell it now , I would rather keep renting it out , and do without my semi-retirement place in the West :-(

Mojisola

goalhanger wrote: »

I'm already in shock , as I was under the impression there were some ways to offset the amount of CGT . I dont want to sell it now , I would rather keep renting it out , and do without my semi-retirement place in the West :-(

Now that you own it, there will be a CGT bill to pay at some point. If the property increases in value in the future, the bill will be higher.

grey_gym_sock

you need to compare the value of the property if you keep it - i.e. what rental it will generate, after deducting expenses and tax, with its value if you sell it, i.e. after paying CGT. the important thing is to maximize the value to you, not to minimize the tax.

if the purpose of this capital is to generate an income for you, then what % is it generating, i.e. what is the net rental income as a % of the net proceeds of sale?

if the purpose is to buy a different property which you'd live in, would that still be possible after paying CGT?

as has been said, if you do genuinely switch your main home to this property, and later sell it, you can get some reduction in CGT. if you both make it your main home for a period and let it commercially for a period, you can get some further relief.

sue_sue_2

Hi all,

to those who thought the 20 pound charge was weird (it baffled me and my sister) it was weird- it was a mistake !

Letter should never have been sent and they have just realised- case reopened, great ! just as im facing redundancy.

The reason for my posting is that the house two doors down from me is soon to go on the market however the current owners said they would sell it to us directly excluding agent fees etc.

We were looking at buying to become landlords and lease the property- will this effect the investigation ?

Thanks

sue_sue_2

Hi sorry I did not make it clear that the house would go in my sister name however with a large compensation claim I would help fund it !

We are starting to think its not the best idea !

John_Pierpoint

Hi Sue_Sue,

I am slightly confused by how your latest posting follows on from your initial posting. Presumably HMRC have still picked up on your sale of a house that was not your Principle Private Residence and won't be giving up chasing you for the figures to see if there is CGT owing. We cannot really comment any further unless you post the figures and dates of the transactions.

Presumably you still have a chunk of capital left from the sale of the house? So paying the CGT (and interest and possible penalties) should be easy, though painful.

I have also looked through your other thread that culminates with your husband taking up with another woman. [Temporary aberration?].

So are you proposing to formally lend your capital to your sister, rather than become part owner of another buy to let investment or is some more informal arrangement proposed to shelter your capital from your husband?
[I would not be surprised at this point to get some "what is mine is mine and what is yours is ours" type postings from the fair sex, but perhaps the tax saving part of the forum is more rational].

You might be thinking at the back of your mind that you could "do a roll over" and put the capital back into rental property. Unfortunately the tax man does not see scrabbling about looking after the problems of tenants and sorting out the maintenance of houses as a self employment business, even when it takes up most of your time.
So the tax man is unlikely to be interested in anything other than: you bought a house, moved out and kept it as in investment, sold it at a gain and did not bother to work out if you had made a profit and if so have you created a liability for tax.

https://forums.moneysavingexpert.com/discussion/76953

Good luck with what will be a time of transition in your life.

jamesd

It's really unlikely that you'll have a large CGT bill, just give the details 00ec25 mentioned. Almost all of the gain was while you were living in the place as your PPR and for the three years after that. Add in the effect of letting relief and there's normally going to be less CGT than the annual allowance.

If HMRC is asking about anything else you should really ask them why when the investigation is about CGT and it's clear from thr dates and (presumed) amounts that there's not going to be any CGT liability.

HMRC might be asking about expenses if they are also looking into any investment you did in improving the property and any expenses you may have had while letting out the property. This can be relevant because only the interest part of a mortgage can be deducted from rental income for income tax purposes, not the capital repayment part, so they may suspect that you have failed to declare income.

Given the questions being asked I think they have moved on from just investigating CGT and into income tax issues.

sue_sue_2

Hi all,

Today I went to see a tax specialist and have handed them everything I have on the investigation. Ive had a recent marraige split and knowing that my soon to be ex-husband knows where we live and how to get into the house etc Im not happy to carry on living where I do.
Im thinking of selling and depending what the tax specialist thinks either buying or moving into rental my self !!

Savvy_Sue

sue_sue wrote: »

Hi all,

Today I went to see a tax specialist and have handed them everything I have on the investigation. Ive had a recent marraige split and knowing that my soon to be ex-husband knows where we live and how to get into the house etc Im not happy to carry on living where I do.
Im thinking of selling and depending what the tax specialist thinks either buying or moving into rental my self !!

Off topic, I know, but does he still have an 'interest' in the house? If not, just change the locks!