Do i need to pay tax ?

paul2468

Hi, looking for some advice
14 years ago when i was in the Army i bought a flat for £27.000, i have never lived in it but always rented it out.
I have since married, and we have got our own home, in my wifes name only.
The flat has just gone on the market at £75.000.
Will i get taxed on any profit that i make on the property ?

MJSW

Yes, as you have never lived in the property, you will get no PPR relief. Consequently the gain will be calculated in the same way as for any other asset.

You will get the normal reliefs however, such as indexation allowance, taper relief and your annual exemption.

Your gain will be (roughly): 75000 - 27000 - 8000 indexation = £40000

Taper relief 25% = 10000

Tapered gain = £30000

Annual exemption £8200 (assuming you don't have any other gains)

Taxable gain = £21800

Tax will be payable on this gain at your marginal rates of Income Tax. The indexation figure is only a rough estimate, the actual figure would depend on the exact month of acquisition.

Other things you may want to consider:

- Could you transfer half the property to your wife to make use of her annual examption?
- Have you any other assets on which you have already sold at a loss (such as shares for example), or still hold but would make a loss if you sold now? If so, you may be able to use either losses brought forward, or losses made in the same tax year, against the gain on the property.

Robert_Sterling_3

Are there not any special rules for members of the forces who of necessity do not live in their own property?

paul2468

I am now just about to complete for 65k i am paying the buyers legal fees (£800) and deposit, ( 5% ) . The property was overpriced to begin with, and it went on the market just as it started to take a dip, so nothing was moving, what now would i be looking at ref CGT ?, Sorry to say that i never took any advice as i expected the property to sell fast.