Capital Gains Tax on a Buy to Let

Pippajane

I changed my mortgage to buy to let as I moved out and rented somewhere else. It is my only property and I pay tax on the rent received. The mortgage is £100k, it's sale value could be around £170k, my question is would I have to pay Capital Gains Tax on the sale?

00ec25

yes you are liable for CGT, how much you will pay depends on the number crunching

follow these 5 steps to work it out yourself since you are the one liable for tax so you need to understand how you got the figures, not just have them handed to you

https://forums.moneysavingexpert.com/discussion/5764759/cgt-and-letting-relief

ProDave

A question (as someone who will be in this position shortly)

If you have done the sums in that post linked, and proved you have no tax to pay. do you have to bother filling it on on your tax return, or just not bother?

00ec25

ProDave wrote: »

A question (as someone who will be in this position shortly)

If you have done the sums in that post linked, and proved you have no tax to pay. do you have to bother filling it on on your tax return, or just not bother?

read the CGT basics:
https://www.gov.uk/capital-gains-tax/work-out-need-to-pay

are you already required to submit a tax return to HMRC? Yes or No

if Yes then you are required to declare any CGT transaction where the gross proceeds of the sale equal more than 4 times the annual exempt amount even if you have zero CGT to pay. Not many properties sell for less than £46,800 so yes, you'll need to declare

"You still need to report your gains in your tax return if both of the following apply:
- the total amount you sold the assets for was more than 4 times your allowance
- you're registered for Self Assessment
There are different rules for reporting a loss."

if No, then if no CGT to pay you do not need to declare the CGT calculation, but should retain it (and the relevant evidence of costs etc) in case HMRC ever ask for it, bearing in mind they are notified of every property purchase and sale in the uk


IN REALITY
you will almost certainly have to report the calculation and zero net taxable gain because the property has been let and therefore you are already under self assessment anyway
Unless the letting stopped so long ago HMRC have written to you and informed you that you are no longer required to submit a tax return.

Pippajane

00ec25 wrote: »

yes you are liable for CGT, how much you will pay depends on the number crunching

follow these 5 steps to work it out yourself since you are the one liable for tax so you need to understand how you got the figures, not just have them handed to you

https://forums.moneysavingexpert.com/discussion/5764759/cgt-and-letting-relief

Thanks for this, really useful and like you say, I need to work it out for myself which I think I have. Based on it being rented for 3 years that £8,500 is due but with the AEA if I sell it this or next year then it will be zero.

ProDave

Thanks 00ec25 for your knowledge. I am under self assesment as all my income is self employment so when the time comes I will submit the calculations.