Avoiding Capital Gains Tax on a 2nd property after 3 years

noonoo_3

I heard that after three years, you can start to pay capital gains tax on your second property. I guess because the rental money you receive to pay the second mortgage could be deemed as income. Does anyone know how you avoid paying any Capital Gains Tax? Someone told me that you set up a new you account to put that rental money into. It currently goes into a joint account.

Doozergirl

I'm not a tax expert but it's not after three years - you should be paying tax on any profit you make from a second property from day one! The bank account you pay it into doesn't make any difference.

Pieman1972

Rental Income is treated as income so you are liable to Income Tax on this only after your expenses have been deducted. From my rental income at the end of year I deduct : Mortgage Interest, Agents commisions, Insurance premiums, maintenance costs, gas safety inspection fees, for furnished propertys you can also make a 10% deduction for wear and tear, if you have an accountant you can also deduct their fees in preparing your return plus any other accounting costs.

I think you may be getting confused the 3 year and CGT is when you sell the property - if within 3 years I think you don't pay CGT as long as you've lived in the property prior to letting......but there are other reliefs available from reading various threads on this site.......perhaps do a search for letting and capital gains

BTW - I am not a tax expert purely someone with a rented property.....

HTH..........