How can I reduce future Taxes on Rental Properties

[private-landlord]

Hi,

Newbie here, not sure where to start.

House 1 bought in 1992, rented out since then. Cost £70K, worth £200K, remortgaged last year to £80K. Put in joint names last year.

House 2 bought in 1995, lived in it until I bought House 3. Cost £58K, Worth £170K, remortgaged 2 years ago to £80K. In sole name.

House 3 bought last year, for residential purposes. Cost £142K, worth £180K, mortgaged £118K. In sole name.

Wife wants us to move to a larger house (4), which will cost £260K. I will need to raise £100K via remortgage of house 1 & 2.

High probablility that I will sell House 3, as yield would not be too great, not sure about where property prices will head.

My wife has no income, I am on 40% PAYE.

My question is, Will I be liable to any CGT on sale of either house 2 or 3.

Is there a more tax efficient way I could manage my properties.

Thanks for any help,

Regards,

Avtar

[demetris]

Since house 2 has been your PPR for about 8 years, it qualifies for lettings exemption for the one year or so of letting. The gain attributable to the period of letting is not exempt but it will be further to the lower of exempt gain or 40k, so there will probably be no CGT.

On disposal of house 3, there will not be any CGT either as it is your PPR.

The question of how to structure the property portfolio in the most tax efficient way can only be answered properly if you sit down with a good qualified acountant and discuss your affairs and circumstances with them to enable them offer proper advice.

I hope this helps.
Demetris Savva BAS FCCA
http://www.tax-accounting-london.info
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