Capital Gains Tax

stebiz

I have a Buy to Let property, in my name, which is run down and I'm thinking of throwing it to Auction. Not worth a lot, maybe 40k.

Would somebody be kind enough to explain the best tax efficient way of disposing of it.

I have a wife who is a basic rate tax payer like myself.

Thanks

CLAPTON

how much did you pay for it

have you ever lived there

stebiz

CLAPTON wrote: »

how much did you pay for it

have you ever lived there

About 1k :)and no I haven't.:(

CLAPTON

gain would be

40,000 -1,000 - buy/sell fees(leta say 3,000)


so gain would be 36,000

you have a 10,900 cgt allowance 10,900

so taxable gain 25,100 at something between 18% and 28% depending upon your earning

however you can transfer half the house to your wife and then you split the gain between you but then both have the cgt allowance


The transfer must not be make specifically to avoid tax so do it asap and before you put the property on the market

so each person will then have gain of 18,000 -10,900 i.e. 7,100 each
so a lot less tax

stebiz

CLAPTON wrote: »

gain would be

40,000 -1,000 - buy/sell fees(leta say 3,000)


so gain would be 36,000

you have a 10,900 cgt allowance 10,900

so taxable gain 25,100 at something between 18% and 28% depending upon your earning

however you can transfer half the house to your wife and then you split the gain between you but then both have the cgt allowance


The transfer must not be make specifically to avoid tax so do it asap and before you put the property on the market

so each person will then have gain of 18,000 -10,900 i.e. 7,100 each
so a lot less tax

Thanks mate.

Pennywise

stebiz wrote: »

I have a wife who is a basic rate tax payer like myself.

Advice already given is good, but can we just check that you are legally married and not common-law. I've seen people caught out by this but there aren't the same tax exemptions for transfers between common-law spouses as there are for those legally married (or civil partnerships). Just something to be wary of for you and maybe others reading this thread.