Multilet + Rented + own house

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    Multilet + Rented + own house

    I'm lost, I know I need to get some documents but if Ramnik or someone else help, that would be great!
    I've just moved out of my house and renting it to multiple people, I've checked with council and it doesn't need to be reg. But I do pay all bills so would want to claim this back if possible. I have lived there for two and half years.

    I have recently bought a house and renovated it, its now licenced with council as multi let and fully rented. I bought it for £180,000 and now its worth £210,000 ish.

    I have moved into a new house with my partner which is joint.

    1) My question is what tax forms do I require?
    2) I plan to re-mortgage my renovated property and do it again, can I just remortgage and invest into new buy to let? Or more paperwork?
    3) Should I set up as a sole trader and start accounting everything through this to save confussion?
    4) If I keep my 1st property and carry on renting it out this would be over 3 years, so if I sell it I would have to pay capital gains to the full amount or only what its worth now to what it eventually sold for. i.e I bought it for 175,000 two and half years ago, now worth 225,000 (when I re-mortgaged they came and valude it at that, 4 months ago) if I sold it in five years time for £300,000. Would this mean I'd be charged capital gains of 40% on £75,000. or 125,000?

    Thanks for any help.
    My opinions are exactly what you would expect, my own!

    #2
    Originally posted by multipropertyguy View Post

    I'm lost, I know I need to get some documents but if Ramnik or someone else help, that would be great!

    I've just moved out of my house and renting it to multiple people, I've checked with council and it doesn't need to be reg. But I do pay all bills so would want to claim this back if possible. I have lived there for two and half years.

    I assume this is let property No 1.

    I have recently bought a house and renovated it, its now licenced with council as multi let and fully rented. I bought it for £180,000 and now its worth £210,000 ish.

    I assume this is let property No 2

    I have moved into a new house with my partner which is joint.

    I assume this is property No 3 and your residence.

    1) My question is what tax forms do I require?

    You need to notify your lettings business to your tax office and they will send you the normal self-assessment tax return plus the supplementary page ''Land and Property'.

    2) I plan to re-mortgage my renovated property and do it again, can I just remortgage and invest into new buy to let? Or more paperwork?

    You can remortgage let property No 2 to release funds to invest in a new buy to let.

    3) Should I set up as a sole trader and start accounting everything through this to save confussion?

    There should not be any confusion and there is no need to set up a separate sole trade for letting. However, it is advisable to keep a separate bank account and keep proper records relating to your lettings business.

    4) If I keep my 1st property and carry on renting it out this would be over 3 years, so if I sell it I would have to pay capital gains to the full amount or only what its worth now to what it eventually sold for. i.e I bought it for 175,000 two and half years ago, now worth 225,000 (when I re-mortgaged they came and valude it at that, 4 months ago) if I sold it in five years time for £300,000. Would this mean I'd be charged capital gains of 40% on £75,000. or 125,000?

    All gains from beginning to end is spread out evenly throughout the period of ownership. Gains for period for which the property is used as your home, and also final 3 years period of ownership to the extent it is not already included in your period of residence, is exempt from CGT..

    Gains for the rest of the period is reduced by lettings relief, taper relief and annual exemption. Any remaining gain is taxable.

    You could continue letting for significantly longer than 3 years and not pay any CGT.


    Thanks for any help.

    Best to seek professional advice.
    See replies above in red.

    Ramnik
    Private advice is available for a fee by sending a private message.

    Comment


      #3
      I've just contacted the Inland Rev and they say if I'm only renting and not renovating then all I need is Self Assesment form + Land Form.
      If I am renovating then I'm self employed and I will need to register as that.

      Whats the difference anyway?
      Does this mean I can put building materials through the books and deduct from my income in rents? If so this might be the better option as I can probably save more..than house expences -10% wear & tear?

      Thanks again.
      My opinions are exactly what you would expect, my own!

      Comment


        #4
        Originally posted by multipropertyguy View Post
        I've just contacted the Inland Rev and they say if I'm only renting and not renovating then all I need is Self Assesment form + Land Form.
        If I am renovating then I'm self employed and I will need to register as that.

        Whats the difference anyway?
        Does this mean I can put building materials through the books and deduct from my income in rents? If so this might be the better option as I can probably save more..than house expences -10% wear & tear?

        Thanks again.
        I think the tax office is telling you that if you are renovating to resell at a profit, you should be taxed like a builder. IN this case you will need to register as a self-employed builder and you will be charged to income tax and NIC rather than Capital gains Tax.

        But if you carry our capital improvements to the property before letting, the improvement expenditure would normally be added to your original cost price of the property and be taken into account in the calculation of Capital Gains Tax if and when you sell it.

        Ramnik
        Private advice is available for a fee by sending a private message.

        Comment

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