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Where Taxpayers and Advisers Meet

selling a BTL and change of ownership

ackersj
Posts: 15
Joined: Wed Aug 06, 2008 3:43 pm

selling a BTL and change of ownership

Postby ackersj » Thu Jun 13, 2019 9:19 pm

I wonder if anyone can help me !? My wife has been the 100% owner of a BTL property for approx 5 years. The property has recently become empty and we are renovating it and intend selling it. I expect we'll make a profit of around £50K on the original purchase price with renovation costs of around £10K. I want to utilise my CGT allowance ( and lower rate tax band ) if possible. Can I transfer ownership with the Land Registry now ( and would there be any Stamp Duty to pay when there is no money swapping hands ? ). I would the hope/expect we would manage to sell the property with 50/50 ownership in 3 to 6 months time. Secondly can I deduct the £10K in renovation costs when calculating the CGT that is due ? Any help much appreciated.

ackersj
Posts: 15
Joined: Wed Aug 06, 2008 3:43 pm

Re: selling a BTL and change of ownership

Postby ackersj » Thu Jun 13, 2019 9:23 pm

ps. I have noticed some similar posts but none of them got answered fully

ackersj
Posts: 15
Joined: Wed Aug 06, 2008 3:43 pm

Re: selling a BTL and change of ownership

Postby ackersj » Thu Jun 13, 2019 9:27 pm

Is a Declaration of Trust a better way to do it ?

bd6759
Posts: 3109
Joined: Sat Feb 01, 2014 3:26 pm

Re: selling a BTL and change of ownership

Postby bd6759 » Thu Jun 13, 2019 10:22 pm

The question has been answered fully many times.

Your wife can gift you half the property. This does not need to be done at the land registry. A declaration of trust is sufficinet.

Repairs are not an allowable cost. It depends wat you mean by rennovations.

ackersj
Posts: 15
Joined: Wed Aug 06, 2008 3:43 pm

Re: selling a BTL and change of ownership

Postby ackersj » Fri Jun 14, 2019 9:18 am

The question has been answered fully many times.

Your wife can gift you half the property. This does not need to be done at the land registry. A declaration of trust is sufficinet.

Repairs are not an allowable cost. It depends wat you mean by rennovations.
Thanks for the reply. I have read more of the previous replies now and am I bit more relaxed about the Declaration of Trust route. I wanted to be clear before I spoke to my solicitor as they do sometimes give you different answers.

By renovations I mean we are putting in a new bathroom and kitchen rather than just patching it up as we would when it was occupied as a BTL. We rented the property AS IS when we bought it 5 years ago ie. no large scale renovations. I looked at the CGT part of the tax return and there is a box on the Working Sheet for Improvement Costs Box F so I am thinking I can put the £8-10K renovation costs in there ?

When we make a Declaration of Trust is that only with effect from the date of the document. In other words the IR could not come back and say the last 5 years rent needs to be treated in the same way. ie. that all went to my wife

Jholm
Posts: 103
Joined: Mon Mar 11, 2019 4:22 pm

Re: selling a BTL and change of ownership

Postby Jholm » Fri Jun 14, 2019 11:11 am

Effective as of the date it is set up. Cannot be backdated, otherwise people would drastically manipulate past tax bills.

bd6759
Posts: 3109
Joined: Sat Feb 01, 2014 3:26 pm

Re: selling a BTL and change of ownership

Postby bd6759 » Fri Jun 14, 2019 12:57 pm

Improvement usually means adding an extension or some other capital expenditure.

It seems to me that you are repairing a worn out bathroom and kitchen, unless you are putting in high end fixtures and fittings. It would be unusual to do that to simply sell the property.

If you are modifying the property to make it worth more money (beyond simply repairing it) you may be liable to income tax on the profits of a trade.

ackersj
Posts: 15
Joined: Wed Aug 06, 2008 3:43 pm

Re: selling a BTL and change of ownership

Postby ackersj » Mon Jun 17, 2019 11:49 am

Thanks for the replies. I am actually upgrading the kitchen and bathroom to get a better sales price, I wouldn't call it high end but it's better than the original. I'll have a good read before I do my tax return. It's not a huge amount of money either way as hopefully I'll get all the capital gain within the 10% bracket.

ackersj
Posts: 15
Joined: Wed Aug 06, 2008 3:43 pm

Re: selling a BTL and change of ownership

Postby ackersj » Mon Jun 17, 2019 12:03 pm

Another thought. If the kitchen/bathroom was deemed to be repairing a worn out bathroom and kitchen can I put that as an expense against the rental income of the now empty house ( and two other ongoing rentals ). It would actually be financially advantageous to do it that way.

AdamS93
Posts: 238
Joined: Tue Sep 26, 2017 6:28 pm

Re: selling a BTL and change of ownership

Postby AdamS93 » Mon Jun 17, 2019 1:50 pm

Thanks for the replies. I am actually upgrading the kitchen and bathroom to get a better sales price, I wouldn't call it high end but it's better than the original. I'll have a good read before I do my tax return. It's not a huge amount of money either way as hopefully I'll get all the capital gain within the 10% bracket.
You mean the 18% bracket...


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