Capital Gains Tax - how does it work ?

Rocky70

Hi All
looking for advice please on how CGT works and what we would have to pay if we sell. So we purchased a house buy to let for 120k approx. 2007 , its now worth 140k - is the mortgage taken into consideration for profit or just what we bought and sell for . Ie is our profit between us 20 k ? (140 - 120 )or the fact that our mortgage is now 60k is our profit between us 80k ?(140 - 60 ) I hope that makes sense and sorry if dumb question - many thanks

00ec25

have you done any searches at all? Your gain is 20k

https://www.gov.uk/capital-gains-tax

Rocky70

hi , yes I did search and I did think that was the case ! But it seemed a bit too good to be true - usually the tax man wants more £££ - hence me posting and apologising if it was a bit dumb
thanks for the response much appreciated

pjcox2005

Don't forget you can offset costs of buying and selling e.g. legal fees, estate agents costs.


You also have a capital gains personal allowance if you haven't used it in the financial year of £11.7k.


So assuming the gain is split 50:50 between the two of you and neither have used your allowance then you shouldn't have any tax liability to pay but you'd still need to report it.

Pennywise

Can we just check you've only been claiming the mortgage interest against your rental income each year and not the entire mortgage repayment?

Rocky70

hi yes just been claiming the interest only bit - thanks everyone