Capital gains tax on 2nd property

JMW77

If we buy another property do we have to pay CGT first?

Beginning to think we should keep it and do it up its so confusing or maybe i should ket my daughter live there rather than loose thousands especially as she wants to start looking for a house soon.
I did wamt to sell and divide between all children .
Not sure any thoughts from anyone?

Pixie5740

You pay CGT when you sell a property and SDLT when you buy a property therefore buying another property will not trigger CGT but you will have to pay the higher rate of SDLT.

You're looking at this from a glass half empty perspective. If you sell you won't be losing thousands you'll have made thousands and you didn't have to do anything to earn it.

JMW77

So i can't buy another property for the mother in law to avoid the capitol gains tax, reason for selling it is father in law died and it needs so much work she wanted to come and live with us.If we bought a better property where nothing needed doing she would probably go back.
Although didn't pay rent so still won't and we will be thousands out of pocket and a better property would be minimum £40,000 more so we would have to get a mortgage on it and if we lost all the money from capitol gains we would need a mortgage for £80,000 + so i guess thats not a good idea.
Her living with us is not great as we have young kids and i know she's not happy but we can't get into all that debt that would be ridiculous.
So just checking if still pay CGT if say we bought another property ?
just looking at all options so i know some basic facts before i speak to my accountant .
thanks

Slithery

Yes, you will have to pay CGT on the sale of this property. Nothing you can do will change that.

PS - You're not losing any money at all, you will still have made a big profit for doing nothing.

runninglea

Is it not cheaper for her to stay where she is and do up the property

You wont have any CGT, selling costs, purchase of new property costs which are expensive as its your second property.

Whatever discount you were given I'm sure you've more than paid that debt off by not charging any rent for 15 years. Is the plan not to charge any rent until she dies?

Even £400 per month over 15 years works out at 75K saving for your MIL. It sounds like you cannot afford to maintain the property which devalues the house.

AnotherJoe

Why do you think you will be "thousands out of pocket" ?

When you sell the place you'll get lets say £300k.

You'll each have to pay say £11k tax.

So you end up with £278k.

How is that being "thousands out of pocket" ?

BTW its capital gains with an "a".

JMW77

No house will probably sell for 150,000 and above poster said we will probably pay 28% CGT on some of the proceeds.I can't do the figures but I think we will loose about 30,000 between us but it could be more or less as I can't work it out but it will be a lot.

( I have no pound sign on my laptop )

JMW77

runninglea wrote: »

Is it not cheaper for her to stay where she is and do up the property

You wont have any CGT, selling costs, purchase of new property costs which are expensive as its your second property.

Whatever discount you were given I'm sure you've more than paid that debt off by not charging any rent for 15 years. Is the plan not to charge any rent until she dies?

Even £400 per month over 15 years works out at 75K saving for your MIL. It sounds like you cannot afford to maintain the property which devalues the house.

Yes I wish we had charged rent now, at he time we thought it was a good buy but they should of done improvements as they had no rent.
We couldn't afford to do any thing ourselves although we did do the bathroom for them but they didn't look after it and it needs doing again.

I will have to pay a fee to estate agent if I change my mind within first 2 weeks I think, and if we do keep it and do it up and she stays there we are still stuck with the CGT when she dies.

00ec25

JMW77 wrote: »

No house will probably sell for 150,000 and above poster said we will probably pay 28% CGT on some of the proceeds.I can't do the figures but I think we will loose about 30,000 between us but it could be more or less as I can't work it out but it will be a lot.

( I have no pound sign on my laptop )

you have been told several times now that you will not LOSE money. How can you? CGT is a tax on the gain in value. If there is no gain there is no tax. If there is tax then it is not 100% so you will never LOSE money since you will end up with more than you started with

look you say you are going to see an accountant so why get stressed on here when it appears you are not listening to the answers you are being given anyway. Pay your accountant to do the numbers for you, then take a deep breath and go an bank your profits

why do you have a job that pays more than £11,500 if that is your attitude because obviously it is "pointless" as you are "losing" money on income tax from earning above the tax threshold

AnotherJoe

JMW77 wrote: »

No house will probably sell for 150,000 and above poster said we will probably pay 28% CGT on some of the proceeds.I can't do the figures but I think we will loose about 30,000 between us but it could be more or less as I can't work it out but it will be a lot.

( I have no pound sign on my laptop )

:wall:

You spent £50k. You get back £150k. You pay out £22k. You end up with £128k in your pocket , a gain of £78k.

How is making a total profit of £78k being "out of pocket"?