What Taxes do I owe?

UplandHigh

Hi, first post, heard good things about this forum.

Just wondering if anyone can help me work out what taxes I need to be aware of.

I sold my only property (flat) via a private mortgage to a family member (property was not mortgageable hence the private agreement). I used a solicitor for the transaction which ultimately led to the sale of the property, a charge being raised and registered and a contract drawn up for the payback of the property over a specified period.

I am now looking to purchase a property (house) for myself to live in.

Trying to work out what taxes, stamp duty, Capital gains etc. that I need to be aware of? Not sure if any of the taxes will be applicable but trying to find out as the property was sold to a connected person and a balance is still out standing though they currently own the property and live there. I am trying to set my budget for what I can afford so don't want to miss anything out.

Any help would be appreciated.

mailmannz

Well, you don't owe the stamp duty, the person buying it does but only if over a certain amount.

Secondly, if this is your one and only property then I don't believe you owe any capital gains taxes.

Regards

Mailman

UplandHigh

mailmannz wrote: »

Well, you don't owe the stamp duty, the person buying it does but only if over a certain amount.

Secondly, if this is your one and only property then I don't believe you owe any capital gains taxes.

Regards

Mailman

Cheers, there was no taxes paid by the buyer as the property was way under the stamp duty threshold and it was their only property when they purchased my flat. Yes the flat was my main and only property. I currently have no property I live in rented accommodation since selling the flat.

I think what I am trying to work out is. If the tax office would view the private sale and private agreement to a family member (connected person) differently. I.e. I have sold my main and only residence on a payment plan to a family member and now (potentially) buying another property to live in. I don't want them viewing that as tax avoidance.

That is what I am trying to work out if I need to hold back x amount from my deposit to pay any likely taxes they might say I owe. If no taxes are owed that is even better as my deposit will be several thousand higher if they do say I owe x amount I will gladly pay it just means my deposit is lower.

I am still in the trying to find a new home phase though so no set date for buying anything. Just getting my budgets and ideas in order for now.

G_M

You have sold a property to someone, right?

So they must pay SDLT dependent on the cost. If the property used to be your main residence, you owe no tax. If it was not, you may owe Capital Gains Tax.

To help them buy it, you lent them some money (effectively a mortgage). They do not pay any tax on this. Nor do you unless you also charge them interest on the loan - that would be taxable as income Tax.

You are now buying a new property. You will pay SDLT based on the purchase price. Is this now your only property? If not (ie you own another one) you'll also pay the 3% Additional SDLT.

UplandHigh

G_M wrote: »

You have sold a property to someone, right?

So they must pay SDLT dependent on the cost. If the property used to be your main residence, you owe no tax. If it was not, you may owe Capital Gains Tax.

To help them buy it, you lent them some money (effectively a mortgage). They do not pay any tax on this. or do you unless you also charge them interest on the loan - that would be taxable as income Tax.

You are now buying a new property. You will pay SDLT based on the purchase price. Is this now your only property? If not (ie you own another one) you'll also pay the 3% Additional SDLT.

Thanks G_M,

Yes, if i buy another property it will be my main and only property. Right now (since selling the flat) I do not own a property and I currently live in rented accommodation. Based on what you and the other poster are advising I would only pay stamp duty if my next purchase is above the stamp duty threshold I would not owe any taxes on the previous property due to the way it was sold.

Thanks, that is what I thought from my searches online but always good hearing similar understandings from others.

saajan_12

UplandHigh wrote: »

Hi, first post, heard good things about this forum.

Just wondering if anyone can help me work out what taxes I need to be aware of.

I sold my only property (flat) via a private mortgage to a family member (property was not mortgageable hence the private agreement). I used a solicitor for the transaction which ultimately led to the sale of the property, a charge being raised -
Capital Gains Tax on the sale price (any cash paid upfront + value of charge) IF you didn't live in teh property throughout your ownership (there are further allowances but that's the first check) and registered and a contract drawn up for the payback of the property over a specified period.- you owe income tax on any interest you earn.

I am now looking to purchase a property (house) for myself to live in.
- stamp duty on the purchase price.. if this is your only home and below 125k then stamp duty is zero.

Trying to work out what taxes, stamp duty, Capital gains etc. that I need to be aware of? Not sure if any of the taxes will be applicable but trying to find out as the property was sold to a connected person and a balance is still out standing though they currently own the property and live there.- that's fine, it was sold at market value. I am trying to set my budget for what I can afford so don't want to miss anything out.

Any help would be appreciated.

CGT- based on the total sale price but 0 if it was your main home.
Income tax- on interest earned on the private mortgage
SDLT- on your purchase only if not your only home or >125k.