Selling a buy to let property - tax question

westernpromise

booksurr wrote: »

SDLT is a cost of the acquisition and is therefore an allowable deduction
see page 14
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/382045/cgt-land-buildings.pdf

But what if you bought it, lived in it and then let it? Does any of the original stamp duty go against the CGT?

booksurr

westernpromise wrote: »

I'm completely lost, sorry. I can't follow any of the examples in that thread.

- Bought August 1999, let April 2004, selling say August 2015
- Total ownership period 192 months
- Lived in 56 months
- Let out 136 months

Gross gain 730,000

What's next?

PRR 730,000 x 56/192 = 212,917

LR, lowest of :
a) 212,917 or
b) 730,000 x 136/192 = 517,083 or
c) max allowed 40,000

net taxable gain
730,000 - 212,917 - 40,000 = 477,083 less personal allowance 11,000 = 466,083

tax payable, let us assume you have a gross salary of 30,000 and no other income... remember the Higher Rate tax bracket starts at 42,386

payable at 18%: 42,386 - 30,000 = 12,386 x 18% = 2,229
payable at 28%: 466,083 - 12,386 = 453,697 x 28% = 127,035

total tax payable 129,264

CLAPTON

further to booksurr excellent post, you can deduct the buying and selling costs from your gross gain of 730,000
i.e. solicitors, estate agents, surveys and apparently stamp duty

Annie1960

westernpromise wrote: »

But what if you bought it, lived in it and then let it? Does any of the original stamp duty go against the CGT?

No.

Only capital expenditure can be offset, as CGT is a capital tax.

http://www.hmrc.gov.uk/manuals/cgmanual/CG15150.htm

anselld

Annie1960 wrote: »

No.

Only capital expenditure can be offset, as CGT is a capital tax.

http://www.hmrc.gov.uk/manuals/cgmanual/CG15150.htm

The incidental costs of buying and selling the capital asset *can* be offset, eg SDLT, legal fees, EA Fees, etc.

http://www.legislation.gov.uk/ukpga/1992/12/section/38/enacted

S38(2). "costs of transfer or conveyance (including stamp duty)"

booksurr

Annie1960 wrote: »

No.

Only capital expenditure can be offset, as CGT is a capital tax.

http://www.hmrc.gov.uk/manuals/cgmanual/CG15150.htm

incorrect - as already shown in earlier post
the introductory section you quote is just that, an introduction to the concept of capital (as opposed to revenue)
the whole cost of the SDLT is allowable, just the same as the whole cost of the EA and legal fees associated with the original purchase are allowable