CGT on BTL Property

netlang

Do you get any allowance for the selling costs such as Estate agents fees?

MarkyMarkD

Uncle_Fester wrote: »

Is this a loop hole in the system?
(Take as much money out as possible, before selling to reduce/avoid tax?)

Why would you possibly think that when my post, immediately before yours, states the opposite?

silvercar

The best way to reduce the potential tax bill is to live in the property.

Otherwise you are going to be taxed on the difference between the selling and buying costs, less expenses and capital improvements.

There is some non-business asset relief if you have owned the property for a godd few years and you have got a CGT allowance of £9,200 (each if jointly owned) if not used elsewhere.

Allowable expenses can include survey and mortgage arrangement fees and estate agent and legal fees. Post some figures if you want an idea of the likely bill. At least the tax won't be payable until the January following the end of the tax year in which the property was sold, so there is some breathing space.

It is becoming a common problem, mortgaging BTLs up to the hill to reduce income tax on the rental and/or release equity, then finding there is not enough equity left to settle tax bills on sale.

Uncle_Fester_2

MarkyMarkD wrote: »

Why would you possibly think that when my post, immediately before yours, states the opposite?

Apologies, I think I got my wires crossed!

Col.Mastard

Uncle_Fester wrote: »

Would I have to pay CGT on a BTL property, which I'm selling to buy another one? (BTL)

Many Thanks

Yes....:cool:

Col.Mastard

Uncle_Fester wrote: »

Is this a loop hole in the system?
(Take as much money out as possible, before selling to reduce/avoid tax?)

You wouldnt pay income tax on a remortage - as it is a loan. You would however pay CGT on the difference between the purchase price and sales price - NOT the mortgaged amount and the sales price (eg: bought for £100k with £85k mortgage. Value increases. remortgage for £110k. Sell next yr for £130k. CGT payable on £30k)

Regards

Colin

epoman

If it is not a business asset does that mean there is no rollover relief available?

silvercar

epoman wrote: »

If it is not a business asset does that mean there is no rollover relief available?

It isn't considered a business asset, so there is no rollover.