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).

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      #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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            • 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
            • 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
            • 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 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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