Capital Gains Tax and the one year Rule

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    Capital Gains Tax and the one year Rule

    Hello All

    Having sold a property which I had let , I understand that I am in for a huge amount of CGT unless I buy another one within a year. Can someone point me to where I canget information on this please, or give me a brief explanation.

    Many thanks


    #2
    You pay Capital Gains Tax on any gain on a property that isn't your main personal residence.
    You can deduct expenses incurred as part of the purchase, sale and any cost incurred in increasing the capital value of the property.

    You can offset any other capital losses in the same tax year or that you have carried forward from previous returns.

    Buying another property probably won't make any difference (unless you sell it at a loss).
    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
      I think you (wotsit) are confusing CGT and Stamp duty. It is irrelevant whether you buy anything else. If you send some numbers someone can advise you what the likely CGT will be. (when you bought, how much, when you sold, how much, if you ever lived there yourself as your main and only home).

      Comment


        #4
        1. Here is an example :

        If you bought a BTL property for £50K in 2009 and sold it after 10 years later receiving £90K . Your capital gain will be £90K - £50K.= £40K.

        after deducting the capital gains personal allowance £11,700 , your taxable gain = £40K - £11,700 = £28,300 .

        If you are paying income tax at 20%, the capital gains tax rate will charged at 18% on £28,300 = £5094.


        2. There is no capital gains tax relief given to a private person for buying a property within one year.

        A commercial property chain may get this tax relief if they close and sell one shop; and reopen another shop.

        Comment


          #5
          Thank you so much everyone.
          Alan

          Comment


            #6
            Originally posted by Gordon999 View Post
            If you are paying income tax at 20%, the capital gains tax rate will charged at 18% on £28,300 = £5094.
            This is incorrect. The capital gain, above the annual allowance, is added to income and, if the total exceeds the basic rate band, part of it will be taxed at the higher rate.

            https://www.gov.uk/capital-gains-tax/rates

            Comment


              #7
              OP has not given any details of his cgt problem . I do not know what his capital gain or income is ?

              The example calculation in post 4 is based on my figures and the tax calculated is correct if the total of capital gain plus annual income is below £46,351.

              If the total of capital gain plus income exceeds £46,350 , the amount exceeding this level will be charged at 28% tax rate instead of 18%.

              Comment


                #8
                Hello Everyone, sorry for the delay in coming back to you, I should have given these details in the first place.

                My wife and I own our own home no mortgage now, retired. I bought the flat for letting in 1994 for £39,000 and have just sold for £440,000.

                Grateful for all your help.
                Best

                Comment


                  #9
                  Well done in making a good investment 25 years ago and taking profit on a ten -bagger win. .

                  I expect the tax man will want to charge 28% on most of your gain.

                  Comment


                    #10
                    Thank you all again, Gordon 999, this is my retirement money and although the gain is a lot, a £100,000 tax bil of my "pension" is a blow.

                    Incidentally, it was my accountant who told me about this one year rule, tha doesn't seem to exist.

                    Have a good weekend everyone.

                    Comment


                      #11
                      There's always an EIS scheme.

                      Comment


                        #12
                        Originally posted by wotsitallabout View Post
                        Thank you all again, Gordon 999, this is my retirement money and although the gain is a lot, a £100,000 tax bil of my "pension" is a blow.

                        Incidentally, it was my accountant who told me about this one year rule, tha doesn't seem to exist.

                        Have a good weekend everyone.
                        I think you should ask your accountant to show you the tax rule about the one year rule.

                        Don't rely on any information given to you in this forum to be 100% correct.

                        Comment


                          #13
                          thats a large proifit - ok now i might be wrong but if you were to purchase another prooperty - or maybe two with that money and then sell them again within a year the same price - then would you be able to pocket that money as the new purchasing would not make a gain so would not be subject to CGT ?
                          As you would be purchasing cash does this matter ?

                          Comment


                            #14
                            This is also running on https://www.taxationweb.co.uk/forum/...ck-t55685.html

                            Comment


                              #15
                              Originally posted by alice123 View Post
                              thats a large proifit - ok now i might be wrong but if you were to purchase another prooperty - or maybe two with that money and then sell them again within a year the same price - then would you be able to pocket that money as the new purchasing would not make a gain so would not be subject to CGT ?
                              As you would be purchasing cash does this matter ?
                              It is pretty obvious that the tax system won't be set up like that

                              There is a provision, that applies to holiday lets, but not normal residential rentals, that allows you to defer the tax if you use the money to buy a replacement property, but you would still have to pay all the tax on retirement. In fact not deferring the tax hit can be better, as you can use use the annual allowance in each year that you sell.

                              If you could defer the tax, you would be hit by the full tax on the second sale, not zero tax.

                              Comment

                              Latest Activity

                              Collapse

                              • Second payment on account
                                dotcotton999
                                Hello all,

                                After paying my 2017/18 tax bill I was asked to pay the first payment on account for 2018/19. The first payment was due by the 31st July 2019. This payment goes towards my future tax bill.

                                I paid that money owed by the deadline but it hasn’t reduced my 2018/19...
                                02-08-2019, 05:58 AM
                              • Reply to Second payment on account
                                dotcotton999
                                I telephoned HMRC... they said usually the amounts are worked out automatically but there had been issues with some accounts because payments on account hadn’t been generated correctly by them

                                thanks for all the assistance...
                                17-09-2019, 19:46 PM
                              • Reply to Second payment on account
                                Gordon999
                                If you make your tax return online, then you can check the "statement " section showing your payments made to tax office against your own bank statements.
                                17-09-2019, 00:01 AM
                              • Reply to Second payment on account
                                dotcotton999
                                There’s me thinking it’s called self assessment...
                                16-09-2019, 19:28 PM
                              • Name off title deeds to remove tax liability
                                Edgarina
                                I am a higher rate tax payer and my wife is not. I have removed myself from the mortgages of the two buy to let properties we have jointly owned and all the proceeds of the properties are now going into an account in my wife's name. Is this enough so I am no longer liable to pay tax on the income from...
                                07-09-2019, 13:40 PM
                              • Reply to Name off title deeds to remove tax liability
                                Kape65
                                With legislation on linked transactions I would suggest their would be a SDLT liability dependent on the mortgage value transferred. If the joint value amounted to £40k or more then 3% would be payable on the entire amount.
                                16-09-2019, 18:58 PM
                              • Reply to Name off title deeds to remove tax liability
                                Edgarina
                                Hi,

                                The property value is about 55k each so no stamp duty, the bank had no issues at and didn't even mention it but of course I said I was coning off the deeds too and its via the banks (very expensive solicitors).

                                I have had an opinion from an accountant and yes it looks like...
                                16-09-2019, 16:13 PM
                              • Reply to Second payment on account
                                OneSmallStep
                                I think if I had a £200K tax bill, then my accountant should really be earning their money and explaining in detail how my liability is calculated....
                                16-09-2019, 10:37 AM
                              • house to flats tax implication
                                halfax
                                i have a large house which i have rented for 18 years and i am considering turning into 3 flats. would i be able to sell as a develope (treated as a trader) when the flats are completed?
                                would it be a capital gain or would i be able to move them into a company just paying stamp duty
                                15-09-2019, 10:51 AM
                              • Reply to house to flats tax implication
                                Gordon999
                                If you sell the house to a company, you would be liable for capital gains tax on the calculated capital gain ( = sale proceeds minus original cost ) at 18% or 28%. But you can claim personal capital gains allowance of about £12K. The company has to pay sdlt.

                                If you convert the house and...
                                15-09-2019, 17:38 PM
                              Working...
                              X