If I release equity, do I pay tax on the extra borrowing?

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    If I release equity, do I pay tax on the extra borrowing?

    I have a few btl's, and I want to release some of the equity by taking a 'further advance', my question is, do I need to declare the extra loan as income on my tax return? I plan to put some towards another deposit, and keep the surplus. I presume it is not classed as income, as it's a loan, is that correct?

    Any advice would be good :-)

    #2
    It's NOT income YET. It's a Loan you have to pay back. When you sell, and if the house price has gone up, you will be liable for the capital gains tax. However, you will have spent the capital gain and the tax.

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      #3
      Thanks for that, I thought that would be the case, much appreciated :-)

      Comment


        #4
        however if you have invested the money in more properties, it MIGHT help you in the long run when you come to sell, as you can sell properties at different times ( 1 per year) and may be under the CGT threshold for each one (other than the one you advance on). it would take some working out and might not actually be viable as you would still have the cost of the original advance to deal with, but it might be worth getting some professional financial advice as I am just probably dreaming LOL !!!

        tax avoidance is legitimate, tax evasion is illegal !

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