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

                          • A question about Stamp Duty on a new home when moving from abroad
                            Galina
                            Hello everyone,

                            I wonder if anyone would know the answer to my question.

                            I own a flat in London where I lived for a year, then my husband and I went to travel for a year and then spent a year in my husband's home country.
                            I let my London flat for two years and I don't...
                            23-08-2017, 12:04 PM
                          • Reply to A question about Stamp Duty on a new home when moving from abroad
                            jpkeates
                            It simply depends on how many properties you own.
                            If at the end of the transaction, you own more than one property, you pay the additional 3% SDLT rate.

                            It's not really a buy to let surcharge, it's a multiple property owner surcharge.
                            23-08-2017, 12:07 PM
                          • Tax deduction on account and maintenance works
                            max_co71
                            Instead of hiring an accountant and services company, I have been doing the account and maintenance works myself on my buy-to-let property. While declaring tax return, can I include the hourly rate (as tax deduction) for the works I had done (the account and maintenance services works) ? If I can, is...
                            21-08-2017, 23:59 PM
                          • Reply to Tax deduction on account and maintenance works
                            jpkeates
                            It's nothing to do with the income being taxable - that's just a red herring.
                            It's not allowed because HMRC has decided it's not - it's part of the job of being a landlord.

                            If it were to do with the income being taxable, someone who earned less than the tax free allowance could happily...
                            22-08-2017, 10:26 AM
                          • Reply to Tax deduction on account and maintenance works
                            AndrewDod
                            Put another way, are you planning to declare the income you earn from doing this work (and pay tax on it)?
                            22-08-2017, 10:09 AM
                          • Reply to Tax deduction on account and maintenance works
                            Gordon999
                            You cannot charge for your own time against the rental income because its still part of your annual income for income tax calculation.
                            22-08-2017, 06:03 AM
                          • Capital Gains Tax Query
                            glyall
                            Hello,

                            I am looking for help with regards to a query about CGT.

                            First off, the situation. I own a flat in Dundee. It's been my main and only residence since September 2013 (nearly 4 years). I am planning to move to Edinburgh to be closer to my girlfriend. She owns a flat 50-50...
                            21-08-2017, 10:28 AM
                          • Reply to Capital Gains Tax Query
                            Gordon999
                            If you buy a cheap flat and re-sell after 6 months , the tax Office may decide the "profit is trading income" and subject to 20% or 40% income tax. You would have to live in the flat for atleast one year or longer to claim main residence and exemption for cgt..

                            If you have a...
                            21-08-2017, 17:31 PM
                          • Clarification on ATED
                            klinka01
                            Hi guys,

                            Just needing some clarification regarding the ‘annual tax on enveloped dwellings’ (ATED). From what I understand, there is a charge of £3500/ year for limited companies owning properties worth >£500,000.

                            For arguements sake, if I bought a property for £499,000,...
                            21-08-2017, 11:38 AM
                          • Reply to Clarification on ATED
                            Gordon999
                            If you’re not sure which value band your property falls into, you may be able to ask HMRC for a Pre-Return Banding Check (PRBC) if:
                            • you’re not due a relief that will reduce your ATED charge to nil
                            • your property valuation falls within 10% of a banding threshold


                            The 10% banding thresholds...
                            21-08-2017, 17:03 PM
                          Working...
                          X