Selling 2nd Property

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    Selling 2nd Property

    I was wondering if anyone could give me some advice?

    I bought a derelict house 6 years ago, in my sole name, without mortgage with redundancy money for 60K with the intention to eventually move in.

    For personal and financial reasons I just slowly chipped away at the work and it is now ready to move in, but as I own another house and so does my new boyfriend and I've lost the love for my project, I've changed my mind and now want to sell.

    We are both on basic tax rate.

    What tax implications would this have as all these taxes are confusing the hell out of me?

    #2
    The profit after your property sale is charged to Capital Gains Tax at 18% or 28%. You can claim first £11000 capital gains allowance. which is tax free.

    The profit is calculated from "proceeds of sale" minus "original cost to buy property + legal expenses " minus "6 years of refurb costs" .

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      #3
      Principle Private Residence relief (PPR) exempts gains made on a taxpayers main residence.
      In this case, the house in question has never been your main residence so PPR will not be available.
      Unless you make the house your main residence for a period of time, the full gain will be taxable as set out by Gordon above.
      The level of your other income will determine how much of the gain is taxed at 18% and how much is taxed at 28%.

      Comment


        #4
        do you need to sell or you could you just keep it and gain a steady income. as you already own the property you could take out a BtL mortgage on it to release capital on which you wont pay any tax and still gain from rental income and future capital growth. you could even just release enough to get an additional BtL (25% deposit plus fees and stamp duty etc) and expand your portfolio.

        remember that if you do sell and want to get a BtL in the future, you will end up paying stamp duty at the higher rate plus fees for buying etc.

        I would strongly suggest you sit down and discuss your options. you need to work out (between you?) what your future plans and wishes are, both short term and long term (pension/early retirement etc). it sounds as though you have an ideal opportunity to grow your 'business' that others can only dream of !! don't waste your opportunity, you may come to regret it.

        you might have fallen out of love with your project but you would be surprised how fickle property love is - especially when it starts to repay you ............

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        • Reply to Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          Hi Andrew
          First of all I've got an initial appointment to speak to an accountant on Friday!

          Can I just check where you write ' ...at death 1/6th of the value of the whole would have been deemed to pass to you for CGT purposes as the survivors would share the whole'.

          Does...
          08-12-2021, 18:02 PM
        • Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          I appreciate 'ignorance' is no excuse, however there are some mitigating factors, i.e. due to illness etc.

          1. Previous family home rented out - terrible tenants - left owing rent, bad repairs etc. [usual story for some] subsequently property not let for 2 years for a number of reasons while...
          06-12-2021, 13:51 PM
        • Reply to Caught out by changes to Capital Gains Tax
          by jpkeates
          Even if probate wasn't mandatory, it would probably have been useful.
          08-12-2021, 13:44 PM
        • Reply to Caught out by changes to Capital Gains Tax
          by AndrewDod
          Yes this would be the case if it was jointly owned (not as tenants in common). The situation would be that at death 1/6th of the value of the whole would have been deemed to pass to you (for CGT purposes), as the survivors would share the whole.

          So for the 3 periods you would be taken...
          08-12-2021, 12:51 PM
        • Reply to Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          jpkeates
          There was no estate as such, property jointly owned - they were both retired at time of purchase living on small pensions, hence I bought with them so they could stay in the home they'd been renting from council from early 1950s to March 1982 at time of purchase. And I paid for the initial...
          08-12-2021, 10:50 AM
        • Reply to Caught out by changes to Capital Gains Tax
          by jpkeates
          I don't know the historic thresholds, but it's bizarre that there's no probate for both of your parents, their estate has to be tiny for that to be possible nowadays.
          It's probably too late for HMRC to do anything about that, but that process sets the values for CGT calculations later on, so it's...
          08-12-2021, 10:28 AM
        • Reply to Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          Morning Andrew
          Thanks for your response early this morning and clarifying I have to make three separate calculations [the split wasn't clear on the CGT calculator].
          I understand the query on the value but this is an ex council house on a council estate [I feel I have to defend it here as...
          08-12-2021, 08:45 AM
        • Reply to Caught out by changes to Capital Gains Tax
          by AndrewDod
          As gordon indicates you need to consider it in three entirely separate parts, each have their own gain and calculation --

          The part YOU owned before Death 1
          The part YOU owned between Death 1 and Death 2
          The part you owned after Death 2

          Based on the values you give...
          08-12-2021, 05:52 AM
        • Reply to Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          Thank you Gordon, didn't see your response this afternoon. I will look at this with fresh eyes tomorrow as it's late now.
          I've put some figures in my reply to a post just now but answers below to your questions.

          a] £80k Jan 2021 sale price.
          b] As property purchased before...
          08-12-2021, 00:55 AM
        • Reply to Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          Andrew, apologies only just seen your post [was it awaiting approval did you say?] answers are:

          Purchased March 1982 as joint tenancy - so equal split of 33 1/3% each party
          Parent 2 died September 2007 - as joint tenancy I inherited their share - so at this point I own 100% of property...
          08-12-2021, 00:41 AM
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