capital gains or taxable profit

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    capital gains or taxable profit

    I have recently purchased a property to rent out after some minor decorating. However, I may try to sell it, as we have decided to move house ourselves in the near future. If there was any profit to be made after the sale, would it be classed as capital gains or would it be taxed as income.

    Thanks

    #2
    Do you have any other rental properties?
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Yes. I have several properties. I was under the impression that if it was purchased for the sole reason of letting out, but then decided to sell, it would be classed as capital gains. Is this correct

      Comment


        #4
        Yes, it should be - the business is a genuine and trading property investment business, not a property development business.
        So it's a capital gain not income.

        It's possible (remotely) that HMRC would disagree and ask for some evidence of your intent, but I really doubt it.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          That's the answer I was looking for.

          Comment


            #6
            its better if you can keep the property for 12 months before selling to ensure you pay the profit under capital gains tax .

            If you sell the property within 12 months, HMRC may claim you are trading and charge the profit under income tax rates.

            Comment

            Latest Activity

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            • 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 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
            • Reply to Caught out by changes to Capital Gains Tax
              by reluctantlandlord1976
              JP Keates
              I wasn't aware that refurbishment deductions only applied in terms of letting out the property. On the CGT calculator it asked 'How much have you spent on improvements since you became the property owner'.....

              Here's the timeline:

              March 1982 - 1992 3 Owners,...
              07-12-2021, 18:01 PM
            • Reply to Caught out by changes to Capital Gains Tax
              by reluctantlandlord1976
              JP Keates et al - thank you very much for your assistance. I have this afternoon emailed an accountant to try and get an appointment urgently. I hadn't realised it was all so complicated and it was remiss of me to not be aware of the CGT changes made in 2020 due to not renting out the property. Thanks...
              07-12-2021, 17:28 PM
            • Reply to Caught out by changes to Capital Gains Tax
              by jpkeates
              Refurbishment while you were living there is only allowable against CGT if it was solely and exclusively for the business, so if it was to prepare the property to be let, it would be OK.
              If it was simply to improve what was then your home, it fails the basic test.

              Get yourself to...
              07-12-2021, 16:22 PM
            • Reply to Caught out by changes to Capital Gains Tax
              by AndrewDod
              The probate resets a lot of the stuff, but my main response was unapproved
              07-12-2021, 15:36 PM
            • Reply to Caught out by changes to Capital Gains Tax
              by AndrewDod
              You are really short on detail:

              Date (year & month) bought in joint names ______ (what % was yours then)
              Date it converted to your sole name ______ (presumable date of death of parent 2?)
              Declared vale at probate _________
              Capital expenses between date of probate 2...
              07-12-2021, 15:33 PM
            • Reply to Caught out by changes to Capital Gains Tax
              by reluctantlandlord1976
              We were all joint owners. Bought it with parents. I lived there for 10 years before buying own home. I became sole owner upon their deaths. Rented out since 2007-2019. Empty last two year as trying to sell. Hence I was off the landlord radar. I am now extremely worried by your statement that refurbishment...
              07-12-2021, 14:53 PM
            • Reply to Caught out by changes to Capital Gains Tax
              by AndrewDod
              Let us know the exact timescale and money involved year by year - I am sure some kind person (or even myself) with do a calculation for you so that you can assess the risks involved
              07-12-2021, 14:33 PM
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