Capital Gains Tax on rental property


Capital Gains Tax on rental property

Postby aliman22 on Mon Mar 17, 2014 1:03 pm

Hi

I would like some advice on my rental property. I purchased the house in July 2001 for £261,000 . I lived in the house for 3 years and then moved out and purchased another property which then became our main residence. Since moving out of the property we rented it out up until December 2013 so in total it was let out for 9 years. Since then it has been vacant.

I currently have an outstanding mortgage of £272,000. We put the property up for sale and have received an offer of £360,000. If the sale goes through I will be making a gain of £88,000 before legal expenses.

I would like to know how much Capital Gains Tax I will be required to pay. Also can I claim back the Stamp Duty I paid when I purchased the property and the legal expenses which I incurred when buying and now selling the property.

I will be very grateful for all help and advice received.

Thanking you all in advance
aliman22
 
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Re: Capital Gains Tax on rental property

Postby Peter D on Mon Mar 17, 2014 3:40 pm

Is this a joint mortgage i.e. you are both owners..
Yes SDLT and acquisiton costs and sales and legal fees are deductible from the gross gain.
You need to tell me your individual gross incomes for the FY or disposal. Will you have sold prior to the changes in PPR on the 6th of April.

Regards Peter
Peter D
 
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Re: Capital Gains Tax on rental property

Postby King_Maker on Mon Mar 17, 2014 3:48 pm

The Gross gain is £99,000 (before allowable expenditure).

The mortgage is not relevant to CGT.

Have you read HMRC's Help Sheet HS283 on the subject?

http://www.hmrc.gov.uk/helpsheets/hs283.pdf
King_Maker
 
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Re: Capital Gains Tax on rental property

Postby aliman22 on Mon Mar 17, 2014 6:53 pm

Hi
Thanks for your replies. This mortgage is not joint and I doubt I will manage to sell before the 6 April. Sorry but I am not familiar with PPR. I am single and my Gross annual income was around £5000 which I received from the rental property. I have no income at the moment as the property is no longer let out. I hope this clears things up a bit.
Many thanks once again and I look forward to hearing King_maker and Peter and anyone else who is able to shed some light on this matter.
aliman22
 
Posts: 16
Joined: Fri Oct 21, 2011 2:52 pm

Re: Capital Gains Tax on rental property

Postby Peter D on Mon Mar 17, 2014 8:29 pm

You may have a small CG and a tax bill of circa £3,200 if you have no income in 2014/15. You need to tell us the acquisition costs, SDLT and sales and legal fees. Regards Peter
Peter D
 
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Re: Capital Gains Tax on rental property

Postby King_Maker on Tue Mar 18, 2014 8:57 am

PPR = Principal Private Residence.
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Re: Capital Gains Tax on rental property

Postby aliman22 on Wed Mar 19, 2014 10:03 pm

Hi Peter

Thank you for your reply

SDLT was £7830 at time of purchase with acquisition costs of around £1200. Estate agents sales fee will be £4320 and legal cost will be around £1000.

Could you please kindly give me a break down of how you worked out the final figure of CGT.

Many thanks once again.
aliman22
 
Posts: 16
Joined: Fri Oct 21, 2011 2:52 pm

Re: Capital Gains Tax on rental property

Postby aliman22 on Fri Mar 21, 2014 10:33 pm

Hi Guys

Anyone kind enough to shed some light on my previous post. Would really appreciate it.

Thank you very much
aliman22
 
Posts: 16
Joined: Fri Oct 21, 2011 2:52 pm


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