CGT Sense check (& Question re. having earlier re-mortaged on my own home)

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    CGT Sense check (& Question re. having earlier re-mortaged on my own home)

    Good day,

    I am about to sell my single letting property and I wondered if anybody could sense check my below logic (in case I am missing anything obvious...).

    2010 Purchased £115k (part mortgaged £65k interest only)
    2011 Renovations £30k
    2012 - 2018 I let the property
    2019 More renovations £15k
    2020 Let out for another year
    2021 Sale next month for 290k
    2021 CGT personal allowance £12k
    Other costs circa £5k for estate agent purchase and sales fees

    Based on the above I will pay CGT on £113k at presumably 28%??

    QUESTION
    When I initially purchased the letting property i had a partial mortgage of £65k. In 2012 I took out additional borrowing on my own home to repay this mortgage and I have been deducting the interest until recently. I guess this makes no difference to the above calculation? I do not need to or should not take out another mortgage on the letting property before I sell it or anything odd like that?

    Thank you for any general guidance..

    Regards

    #2
    Looks about right .
    CGT as I understand it will be at your marginal rate. So if you are basic rate taxpayer it will be 18% even though the profit would put you in the next tax bracket - so you may get advantage by delaying after April 6th if next year's income will be lower

    Comment


      #3
      What sort of "renovations" (not all are Capital expenses) - did you pay tax on the rent received. Did you already use any renovation costs to offset against rent?

      CGT rates are likely (we do not know) to be higher after April and the allowance will likely be cut.

      Comment


        #4
        Renovations (eg replacement bathroom) you can't claim for, "improvements" you can. (But obviously can't if you claimed against tax earlier). Mortgage is irrelevant to CGT.

        CGT needs declaring & paying within 30 days of sale now. (sold one October 2020)
        I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

        Comment


          #5
          Just an aside, have you been deducting the interest on the mortgage relating to your own home as an expense against the rental income?
          assume everything I write is preceded by IMHO...

          Comment


            #6
            Has any part of the renovations cost been charged as operating expense against the rental income ?

            If no, then liability to cgt on £113K looks correct. If your income from employment is over £50K, then 28% tax rate is correct

            Comment

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