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  • FIRST POST
    • baka99
    • By baka99 12th Apr 18, 5:37 PM
    • 4Posts
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    baka99
    Selling Rented Property Help with Tax Obligation
    • #1
    • 12th Apr 18, 5:37 PM
    Selling Rented Property Help with Tax Obligation 12th Apr 18 at 5:37 PM
    Hi
    I cannot seem to work this out correctly. I rent out one property and the tenant is looking to buy it from me.
    I am a higher rate tax payer. I understand that I have to pay Capital Gains Tax, The difference between what I bought it for and current value is 23,500. Do I get a tax free amount? How much do I pay in Capital Gains Tax? Do I also have to pay income tax on this amount or is capital gains instead of income tax, help appreciated..
    Thanks
Page 1
    • Dazed and confused
    • By Dazed and confused 12th Apr 18, 5:46 PM
    • 3,288 Posts
    • 1,655 Thanks
    Dazed and confused
    • #2
    • 12th Apr 18, 5:46 PM
    • #2
    • 12th Apr 18, 5:46 PM
    There is a Capital Gains tax exemption of 11,700 in the current tax year.

    Capital Gains have different rates of tax to income.

    Capital Gains tax would apply to the gain from selling the property, not income tax. Income tax applies to the rents you receive.

    https://www.gov.uk/tax-sell-property
    • baka99
    • By baka99 12th Apr 18, 5:55 PM
    • 4 Posts
    • 0 Thanks
    baka99
    • #3
    • 12th Apr 18, 5:55 PM
    • #3
    • 12th Apr 18, 5:55 PM
    Ok thanks I found a calculator on that link and it calculated 1,064
    Which is a lot better than I thought.
    So this would be the only tax I would pay?
    • 00ec25
    • By 00ec25 12th Apr 18, 6:34 PM
    • 7,314 Posts
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    00ec25
    • #4
    • 12th Apr 18, 6:34 PM
    • #4
    • 12th Apr 18, 6:34 PM
    Ok thanks I found a calculator on that link and it calculated 1,064
    Which is a lot better than I thought. So this would be the only tax I would pay?
    Originally posted by baka99
    that looks rather low

    you state you are a higher rate income tax payer? Therefore your salary and such income must be more than 46,350 for the 18/19 tax year. Is that correct?

    on that basis you would pay CGT at 28% on the net taxable capital gain

    you say the gain is 23,500 (presumably you have already deducted legal fees, SDLT and EA fees on purchase and sales costs?) so you claim your CGT allowance of 11,700 leaving a net taxable gain of 11,800

    11,800 x 28% = 3,304 tax payable not your 1,064. Either you put the wrong figures into the calculator or you put considerably more accurate figures into it?
    • baka99
    • By baka99 12th Apr 18, 7:00 PM
    • 4 Posts
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    baka99
    • #5
    • 12th Apr 18, 7:00 PM
    • #5
    • 12th Apr 18, 7:00 PM
    Yes it would have come out as 3,304 but I deducted legal fees + estate agent fees in the caculator as they were not included in the 23,500 (estate agent are letting it out and its written in that they get a fee if sold to a tennent), I also lived in the property for a number of years before renting it which I didnt include, but accountant will work that out. Thanks very much for the help
    • 00ec25
    • By 00ec25 12th Apr 18, 7:08 PM
    • 7,314 Posts
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    00ec25
    • #6
    • 12th Apr 18, 7:08 PM
    • #6
    • 12th Apr 18, 7:08 PM
    I also lived in the property for a number of years before renting it which I didnt include,
    Originally posted by baka99
    that is rather relevant and will likely result in zero tax payable

    try again following the instructions here:
    http://forums.moneysavingexpert.com/showpost.php?p=73621764&postcount=2
    • baka99
    • By baka99 12th Apr 18, 7:32 PM
    • 4 Posts
    • 0 Thanks
    baka99
    • #7
    • 12th Apr 18, 7:32 PM
    • #7
    • 12th Apr 18, 7:32 PM
    ok well I would be best case senario to be honnest I thought Id have to pay 3,304 + 40% on the 23500 so this is good news
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