Banana Skin

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    Banana Skin

    I feel I have messed up my life. Despite working hard, I have landed on a banana skin.

    I bought a 3 bedroom house many years ago. It seemed like a nice area. Little did I know, nearby the local housing associations had housed the thugs like the Kray twins and their chums. It was a "problem area". Very dangerous. It was not so apparent, because it did not have a 'reputation' and it looked like a nice neighbourhood.

    I had to leave that house for my own safety and I rented it out. Looking back, this was my greatest mistake. As the house value has gone up a lot. If I sell today, I will have to pay capital gains tax. After paying the tax, I can only afford to buy a 1.5 bedroom home. I have lost a 3 bedroom home.

    I feel angry at the tax system. We pay welfare, but people can behave like animals and take over the local area.

    I cant use the rental money from my 3 bedroom house, to rent out another 3 bedroom house, as I have to pay tax on the rent I receive.

    I have been living in a small flat elsewhere for many years. I feel cheated in life, as the flat does not have a garden and I just crave a good barbecue.....

    Be thankful there is an increase to pay CGT on.

    I bought a flat in Torquay in 2005 for £185k. Someone turned the bungalow next door into a house, wiping out my sea views and about £60k of value. It has now been for sale for £175k for a month without a sniff.

    Presumably your rental income more than covers the house mortgage payments, doesn't it? Therefore add the profit onto what you are paying for your flat, and surely you could afford a house?


      If you quote some details : we can work out roughly the cgt.

      When you bought the property and the price paid
      Dates when you lived in the property.
      Market value now .


        CGT is only 18% (28 If you earn a lot). You still get 82% of any increase in value.
        Plus the rental income.
        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).


          You will also get Letting Relief and Private Residence Relief and your personal Annual Allowance for CGT. Your bill maybe a lot less than you think.



            There is quite a bit which doesn't make sense to me about your post:
            • Inner London always has had a mix of tenures and socio-economic classes living cheek-by-jowel with each other (in some ways it's one of the great things about it), and the the East End (I assume this is the area given you mention the Kray twins) even more than most. Did you really buy a house without knowing this?
            • You had to leave the house "for your own safety" -- come on, this is surely a bit melodramatic: yes the East End used to be a very poor area, and still is poor beyond superficial pockets of gentrification, but plenty of people have always lived there, mostly without coming to any particular harm.
            • Despite it being impossible for you to live there for safety reasons, you seem to have been perfectly happy to rent the property out and let your tenants live there. Did your tenants used to frequently come to harm?
            • The capital gains tax bill will, at most, be 28% of the gain (minus some for the time you lived there, minus some more if you owned it pre-1982). I cannot quite believe this bill has the impact you claim on your future options.
            • If the area has changed and you want a 3-bedroom house, why not just move into it now?
            • You were never guaranteed any capital gain on this property, and assuming it is in the East End then the capital gain will have been far more than you might have reasonably expected when you purchased it. As such, you could never have sensibly banked on this money being forthcoming.
            • Eventually having to pay CGT was surely entirely forseeable from the moment you started letting the property out.
            • In general, I have very little sympathy for anyone moaning about having to pay a big capital gains tax bill, as you only face one if you've been lucky enough to make a whopping great capital gain (a similar rationale applies to people moaning about having to pay most other types of taxes, of course).


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