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Where Taxpayers and Advisers Meet

Income Tax and CGT on 2nd property

Joined:Sat Aug 16, 2014 2:03 pm
Income Tax and CGT on 2nd property

Postby sleephunter » Tue Sep 01, 2015 1:22 am


my question has 2 dimensions - income tax and CGT.

I have one residential home, which we bout last month, I am the ONLY person on the mortgage with HSBC, but me and my wife jointly hold the title deeds. She was not earning at the time we applied for mortgage.

We now wish to buy a 2nd property, we will move in to it and rent the 1st one, OR continue staying in the 1st one and rent the new property.

So, firstly, can my wife get a FTB mortgage (90% LTV) since she is not any mortgage so far and has earnings now from a new job ?

I assume on our 1st property we wont be subject to CGT as we lived in it, however, if we move to the 2nd property and stay in in it for 6 months+, will we ever be liable for CGT ?

Can I rent out one of the properties assuming they are both on residential mortgages and not BTL mortgages.. I heard from someone you are allowed uptp 2 residential mortgages... Is that true ?

How is the income tax calculated on the property I have rented.. Say rent = £1000, mortgage payment =£950, maintenance = £50. Will I be liable for any income tax ?

Sorry for the basic questions, but I am new to the property scenario.

Peter D
Joined:Wed Aug 06, 2008 3:37 pm

Re: Income Tax and CGT on 2nd property

Postby Peter D » Tue Sep 01, 2015 9:55 am

Read HS283 on the HMRC web site. Living in a property for one month does not entitle you to PPR. You are only exempt from CGT for the actual period you live in a property as your home and the last 18 months of ownership. Renting it out will eventually lead to a CGT liability.
To rent a property out on a residential mortgage you need the permission of the Mortgage provider. Failure to get this permission can cause a re-possession of the property.
IT. Is based on the profit. It is only the interest and other expenses that are deductible form the gross rent. The law may change soon and the % of the interest could be capped at 20%. Regards Peter

Joined:Wed Aug 06, 2008 3:22 pm

Re: Income Tax and CGT on 2nd property

Postby King_Maker » Wed Sep 02, 2015 7:49 pm

Is there a good reason(s) why you wish to move out after only one month?

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