I've lived in a flat for 5 years and its time to upgrade. I'm torn between selling the flat and buying a house using some of the capital I have made on the flat or keeping the flat as a BTL.
I'm better with numbers than words so here goes.
11/2009 - I buy a flat @ £380,000 - Do lots of work on it over next 5 years
09/2015 - Flat valued @ £800,000
Capital Gains - £420,000
If I was to buy a new house and keep the existing property as BTL. Let's say in 2 years time I want to sell the BTL but it is still valued at £800,000 will I be hit with GCT on £420,000 even though since renting it out it hasn't increased in value? What about in 5 years time or 10 years time if it still hasn't gone up in value?
I have made the capital gains whilst it has been my only dwelling so it would seem fair that I only pay CGT on any appreciation that occurs from the day I start renting the property. At the same time I have no idea how the government could manage the process if this were the case. Part of me thinks take the £420k and run tax free.
Thoughts?
Thanks in advance.
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