Capital Gains Tax

thegibdog

It's been said on these forums recently that the new capital gains tax rules will have a big effect on the housing market. As I understand it the CGT will generally be reduced from April meaning buy-to-letters have been waiting until then to sell their properties, leading to a glut of properties on the market thus redcuing prices. Can someone confirm whether I have got this correct?

Also could anyone help illustrate waht difference the new rules will make? For instance, if someone had bought 5 terraces in 2002 at £60k each and was now selling them for £120K each, how much would they be taxed on their £300k gain under the new and old rules?

silvercar

Old rules:If they had owned them for 6 years, there would be taper relief of 20%, so the gain reduces to 240k. less CGT allowance of 9.2k = 230.8k. This would be charged at marginal rates, so if they are already a higher rate tax payer it would be 40% of 230.8 ie 92,320

New rules:18% CGT tax on 300-9.4k CGT allowance=290.6k x 18%=52,308

Very new rules:9% CGT on first 150k + 18% on remaining 140.6k=38,808.

In practice, with 5 properties, you would sell them in different tax years.

clutton_2

is the new cgt allowance from April £9800 ???

you can also offset various expenses when you sell which you have not been able to claim before - such as capital improvements, and buying and selling costs.