CGT on BTL flat How to calculate and allowances

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

  • CGT on BTL flat How to calculate and allowances

    Hi. I bought a BTL flat in 2000 for £80000. Hope to sell this year (2012) for £140000. Obviously I had some legal and other costs for the purchase and will have similar for the sale. Am I right in thinking I can work out the average annual increase in value and deduct the last 3 years worth of property value increase from the cgt calculation? Can I also deduct anything due to letting allowance ?
    Now this year I will also buy another BTL property (partly funded by the sale of the first) can I therefore postpone the declaration of,cgt on the first property if I have spent it on another property in the same year?
    Alternatively if I have to make additional capital expenditure on the new property in order to make it habitable then can I offset this additional expenditure against the gain on the first property?

  • #2
    Originally posted by stanfsim View Post
    Am I right in thinking I can work out the average annual increase in value and deduct the last 3 years worth of property value increase from the cgt calculation?
    Why do you think that, have you seen it written anywhere? I believe this is only if the property was ever your principle primary residence. I'm not even sure you qualify for letting relief if you never lived there.

    I've not yet had to deal with CGT myself but as it's a tax on the profit from the disposal of an asset I wouldn't have thought the purchase of another would have any affect.

    Comment


    • #3
      I picked it up from another thread in this forum - no idea if it is correct or not though.......

      http://www.landlordzone.co.uk/forums...638#post369638

      Comment


      • #4
        Also seems to be something in this HMRC helpsheet about last 36 months of ownership and also letting relief - although I can't say its clear to me ....

        http://www.hmrc.gov.uk/helpsheets/hs283.pdf

        Comment


        • #5
          Both of your examples are for selling a property that was at some point your home. As you bought your property as an investment I don't think you qualify for either the 3 exempt years or letting relief.

          Comment


          • #6
            If your BTL flat was let out for entire period from 2000-2012, your capital gain is 60K. You can deduct a free allowance of 10.6K and rest will be taxed at 18% or 28% CGT.

            If you buy a new property and spend on some improvements before start of letting, the total cost can only be set against the proceeds of a future sale for calculating the capital gains tax.

            Comment


            • #7
              & if you ever lived there, then tell us as it will reduce the tax.

              Are you married?

              Comment


              • #8
                Many thanks to you all for your replies.
                No I'm not married the flat is in my sole name.
                Would it make any difference if I lived there for say 6 months before selling - or might this be seen as tax avoidance ?

                Comment


                • #9
                  Tax avoidance is legal, such as using a ISA or utilising your spouse's allowance. It's tax evasion that's illegal.

                  I think you only have the first two years of owning a second property to decide which is your PPR. Although that might be if you aren't, or can't prove, you are living or going to be living in the second property. If you totally move there for six months, have all your post go there, utilties and bank accounts addressed there, register on the electoral roll, etc then it might qualify. Also buying a third property could give you the two years to decide which property is your PPR again. Your current home would benefit from the last 3 year exemption and would qualify for letting relief if you let it out.

                  I'm not 100% sure of all of this. As it could save you a lot of tax it would be worth getting professional advice.

                  Comment


                  • #10
                    Originally posted by JaneK2011 View Post
                    I think... I'm not 100% sure of all of this.
                    Dead right you're not.

                    OP, deliberately living there for 6 months before selling purely to artificially claim PPR relief would make no difference. It would never have become your *permanent* residence.

                    Comment


                    • #11
                      Even if I move in as my sole residence register for council tax utilities etc?

                      Comment


                      • #12
                        It would never have become your *permanent* residence. 6 months is (almost) inevitably temporary. To claim otherwise would be fraud.

                        Comment


                        • #13
                          Ok. Many thanks all for your replies.

                          Comment

                          Latest Activity

                          Collapse

                          • First Time Self-Assessment: Help please
                            Matt_J
                            Hi All,

                            I am in the process of registering for Self-assessment to declare the income and pay the tax on my property for tax year 16/17.

                            I understand I don't actually need to do this until October 17 but I need to do now as I need to borrow against my residential mortgage, and...
                            26-07-2017, 12:06 PM
                          • Reply to First Time Self-Assessment: Help please
                            jpkeates
                            If you do the return now, HMRC will work out how much tax you owe - if you do it after the end of September they make you do it yourself (I think that date's right).

                            Personally I pay an accountant to do the return and make sure I'm not paying too much tax. Costs me a few hundred quid (which...
                            26-07-2017, 13:34 PM
                          • Reply to First Time Self-Assessment: Help please
                            AndrewDod
                            Even if you could pay yourself (which you cannot) you would have to declare that payment as income and pay tax on it.

                            Get decent tax software. I use Taxcalc.
                            26-07-2017, 12:58 PM
                          • Reply to First Time Self-Assessment: Help please
                            Matt_J
                            Sorry 1 more question as well. Do I need to work out my tax liability myself for the self assessment? Or do I just plug the numbers in the website and HMRC work out how much I owe?

                            I am not self employed and pay 40% tax on the top end of my salary earnings via PAYE.
                            26-07-2017, 12:36 PM
                          • Reply to First Time Self-Assessment: Help please
                            Matt_J
                            Thanks for you response, I appreciate it.

                            My question about the accountant fees was because I am a qualified CIMA chartered management accountant - but obviously not an expert in tax, hence my questions! So even if I am an accountant myself and could justify a rate, I still couldn't deduct...
                            26-07-2017, 12:33 PM
                          • Reply to First Time Self-Assessment: Help please
                            jpkeates
                            There no wear and tear allowance for the 2016/17 tax year.

                            New tools are a capital cost rather than a revenue item - replacement tools might qualify, but in both cases have to be wholly and exclusively for the rental business, which isn't easy to prove if challenged.

                            No, you...
                            26-07-2017, 12:15 PM
                          • New government tax legislations
                            Damo-h666
                            Hi thinking about buying my first buy to let property. With the new government tax legislations proposed to hit us by 2020 is it actually worth it. I would be repaying the capital aswell as the interest. Am I right in understanding that the government will tax me on the full rental income and not just...
                            25-07-2017, 14:38 PM
                          • Reply to New government tax legislations
                            tatemono
                            I wish ...
                            26-07-2017, 09:23 AM
                          • Renting below market rate
                            insightforthe
                            Hi,

                            I having been renting out a property i have, to a mate, for below market rate. Last year for a couple of months, i received less rent than agreed due to unforeseen circumstances.

                            So I should have received £17400, but only received £15,400, so I am in deficit of £2k....
                            21-07-2017, 23:28 PM
                          • Reply to Renting below market rate
                            Gordon999
                            I suggest you declare whatever is received in your bank account. Its becomes a pain to declare a higher figure which you did not receive and have to pay tax on it. There are many one year rental agreements with option for tenant to leave after 6 months. There are some rentals where the tenant makes...
                            26-07-2017, 08:35 AM
                          Working...
                          X