New landlord advice - CGT & maintanence offset tax

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

    New landlord advice - CGT & maintanence offset tax

    Hi everyone,
    I am looking to buy a new house and rent my existing. I have 2 questions.

    1. If I rent my existing house for 12 months and then sell it within the next 6 months I can reclaim the 2nd home stamp. My question is whether I will need to pay CGT as I have rented it??

    2. I will rent the house unfurnished but I need to do some maintenance repairs before renting,
    A. Paint the soffits and facia.
    B. Replace a threadbare carpet
    C. Replace a 3 way CH/HT valve
    D. Remove an over grown tree in the garden.
    My question is, are these all approved expenses? Can I subtract the costs from the tax I'm due to pay? Is it ok to action these before tenants move in so that I can still claim against tax??

    Any advice is appreciated! Thanks

    #2
    1 - You will not have rented it for long enough to attract any CGT - you have an 18 month allowance, so the CGT bill will be zero.
    2 - All of those are allowable expenses (you will find conflicting advice about carpets, as the rules have changed recently), they are treated for tax as though they are incurred on the dat your first tenant moves in.
    Note that you can't claim for your own time/labour (or tools), so if you are doing the work, it will be materials only.
    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
      Thanks for the advice. Yes I have read many conflicting stores regarding carpet too but I'm assuming if I can prove the carpet is not fit for purpose with photos and can provide receipts I don't see why it would be an issue. I would have professionals carrying out the maitanence work for me.

      Comment


        #4
        Until this April carpets were excluded because they were furnishings and claiming for furnishings wasn't allowed in unfurnished property.
        That has now changed (even though the law to make the change is not in effect, as far as I can see).
        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


          #5
          You should also bear in mind that things can go wrong with this plan. I'm sure everyone would like to get tax relief on refurbing their home prior to sale, but we now have a new Chancellor and tax rules could change. In addition you could easily get a tenant that trashes the place costing you £many to put right or refuses to leave at the end of their tenancy, or there could be a delay in the sale of your existing property that takes you over the 18 month limit for reclaiming the additional SDLT. Its probably worth running the numbers on different scenarios to make sure this is really worth it. For me, with all the risks and complexities of letting at the moment, it wouldn't be.

          Comment

          Latest Activity

          Collapse

          • Inheritance tax Open Market Vakue
            by Bengt Lagander
            Is a red book valuation an "open market value"?

            the Red Book, the RICS manual for valuers, the open market value ("OMV") is the best price obtainable in a transaction completed on the date of death.

            Is this the correct definition please?
            07-08-2022, 11:33 AM
          • Reply to Inheritance tax Open Market Vakue
            by flyingfreehold
            even with an RICS' firm's valuation, if the valuers at HMRC think it low they will still challenge it. Ive just dealt with an estate the valuation date for which was during lockdown, and with extensive tenanted interests. The RICS firm arrived at their figure by a completely different methodology...
            07-08-2022, 18:40 PM
          • Reply to Inheritance tax Open Market Vakue
            by Neelix
            A written valuation for probate from an estate agent or 2

            then after it’s sold you need to declare the actual value it sold for
            07-08-2022, 12:54 PM
          • Reply to Inheritance tax Open Market Vakue
            by Gordon999
            For assessing property value for estate tax, you would approach 2 or more surveyor firms for their valuation and choose the one who gives the lowest valuation.
            07-08-2022, 12:45 PM
          • Stamp duty question
            by Kekdal
            Hi Gurus,
            I am trying to figure out if I need to pay the 2nd stamp duty.
            I am buying a property which would be my main residence.
            I currently live in a property that I pay rent for as a tenant.
            However I own another property which I had bought to live in and had paid the lower...
            03-08-2022, 09:53 AM
          • Reply to Stamp duty question
            by Kekdal
            Thanks everyone I took professional advise from a qualified lawyer who confirmed that in my case I can't enjoy a lower rate. I kind of knew the answer but was clutching on straws . My oversimplified interpretation based on his advise is: HMRCs logic is if you have more than one property you pay higher...
            04-08-2022, 09:18 AM
          • Reply to Stamp duty question
            by DoricPixie
            The manual is clear, Kekdal will not be able to claim a refund if the BTL is disposed of after purchasing the new home. I don't know the circumstances the other posters to which you refer but they cannot be the same as Kekdal's as they would not be due a refund.

            I don't think it would be...
            04-08-2022, 05:44 AM
          • Reply to Stamp duty question
            by jpkeates
            I used to believe that as well - the HMRC manuals are pretty clear about the situation in my view.

            Which made the surcharge rules a real trap for anyone who owned a let property (maybe for some years) and, who then wanted to buy a home of their own).
            But some people claim to have...
            03-08-2022, 13:42 PM
          • Reply to Stamp duty question
            by DoricPixie
            Kekdal won’t be able to reclaim the higher rate of SDLT. That only works when someone buys a new main residence whilst keeping the old main residence, pays the higher rate of SDLT and then sells the old main residence within 3 years of completing the purchase of the new main residence. Then a claim...
            03-08-2022, 12:57 PM
          • Reply to Stamp duty question
            by jpkeates
            It seems to depend on the timing.

            I used to think that if you owned another property which you let, you were just screwed, because of the second property thing (even if it was your residence you were buying).

            I've been advised otherwise, and that you would pay and reclaim....
            03-08-2022, 12:11 PM
          Working...
          X