Selling flat


Selling flat

Postby chalre on Wed Jan 29, 2014 6:31 pm

Hi

Any advice greatly appreciated.

I am about to sell my flat that I have let out for for years. I bought at 115000 and I will sell at 142000. Thus 27000 profit.

Question 1: Will I get taxed on the profit that I have made by lowering the mortgage. Ie mortgage started at 104,000 and now after four years it is 96000. So am I to be taxed on that 8000 too?

Question 2: I will apparently have an 11000 buffer. If I put my partners name on the house, would this help? Would she also get an 11000 buffer? Is it too late to add her? - I have owned it for four years and we will complete the sale in 3 months time. Would HRMC make me pay a tax on doing this and how much would it be? (We are not married).

Question 3: By putting her on there, would she have to put a tax return in every year too? (Ie adding to our paperwork!)

Many thanks in advance for any help
chalre
 
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Re: Selling flat

Postby Peter D on Wed Jan 29, 2014 7:59 pm

You probably gdo not have a CGT liability due to PPR and LR read HS283 on the HMRC web site. Do NOt add another owner as you will loose a portion of your relief's as they have not lived there.
Please provide all the important dates at least the MM/YYYY acquisition costs, SDLY sales and legal fees and you normal annual income including the rental profit and I'll run the numbers for you to put your mind at rest. Regards Peter
Peter D
 
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Re: Selling flat

Postby chalre on Thu Jan 30, 2014 6:21 pm

Hi Peter

Many thanks for your reply and thanks for the kind offer. Here are the numbers:

Acquisision costs: I bought in 10/2009 for 115000. Solictor fees inc searches were 870. Also another 400 costs for land registry, valuation fees etc.

Selling for 142000 in a couple of months time. 2400 cost of estate agent. 560 solicitor fees.

My normal income from my teaching job is 38600. Rental profit is 1000 per year (15000 in, 14000 going out on interest, wear and tare, management fees etc).

I will definitely look at this PPR and LR HS283 thing (I've never heard of it, but I like the sound of the possibility of not having a cgt liability).

Many thanks again - I await your reply with interest! This is very kind of you.
chalre
 
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Re: Selling flat

Postby chalre on Thu Jan 30, 2014 6:27 pm

Ah,
I have looked at hs283.

I have let out the property for four years. Ie - I am the landlord of the flat. I have had tenants for four years....
chalre
 
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Re: Selling flat

Postby section 44 on Thu Jan 30, 2014 6:30 pm

assuming that you lived in the flat before letting it then you have no gain (due to PPR/letting relief)
section 44
 
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Re: Selling flat

Postby chalre on Thu Jan 30, 2014 6:46 pm

I only lived there for 4 days before I rented it out....(is this bad news?) I did buy it to sell rent...
chalre
 
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Re: Selling flat

Postby section 44 on Thu Jan 30, 2014 6:48 pm

likely yes.
section 44
 
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Re: Selling flat

Postby Peter D on Thu Jan 30, 2014 8:53 pm

No PPR or LR there then. :
Purchase 115,000 14/10/2009
Disposal 142,000 14/04/2014
Total Gain 22,770
PRR 0 0 53
Capital Gain 22,770
Lett Relief 0 Qual Days 0
Net Gain 22,770
CG Allow 11,000
CGT 434 2,621
CGT 0 0

CGT Bill 3,055

Yes adding your partner would help the CGT situation. I am not sure why you mention wear and tear as that is a deductible revenue item. Where do you get the £14,000 out outgoings, it is only the interest part of the mortgage that is deductible not any capital. Regards Peter
Peter D
 
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Re: Selling flat

Postby chalre on Fri Jan 31, 2014 6:37 pm

Hi Peter
Many thanks indeed for this - that looks about what I was expecting. (Though, as you can probably tell, I did not have a clue!)

I rent out 3 flats - so totalled up the total rental outs for all three flats by mistake - at 14000. This flat on its own has outs of 5600. (ie the interest)

Many thanks again for your help - as you can tell, I get easily confused with all of this.


Why would adding my partner help?

Tomo
chalre
 
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Re: Selling flat

Postby Peter D on Sat Feb 01, 2014 6:59 pm

I still need to know your total income in the FY of disposal. Outs, as you call them, are nothing to do with your income as such.
If you partner owned a share of the property prior to any exchange of contract then you would have two sets of CG Allowance. Regards Peter
Peter D
 
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