CGT on a buy-to-let (original primary)

[itsamrlee]

Hi - can someone help me?

I bought a flat (£300k) and lived it in for around 2 years before moving out - I then rented it out (with consent from my lender) for the remainder of the fixed 5 year period.

I then remortgaged and got a buy-to-let mortgage. Valued at £400k.

Question: if I sell for say £500k, do I pay CGT on the uplift since I bought it (£500k less £300k = £200k) or when I remortgaged (£500k less £400k = £100k)

Subject to the usual deductions/exemptions etc

Thanks

[pawncob]

The gain is the selling price less the original cost (£200k)

[HayEu]

We have been told that you pay CGT from what it was valued at when you let the property. So as it was valued at £400k when you let it out, you would only pay on any profit above that.
We were told that last year.

[Lambs]

It may be that H is incorrect: actual values are relevant only where property was held on 31/3/1982 or if the querist was non-resident at 06/04/15, or if the property were the querist's only or main residence for some part of the overall period of ownership for CGT purposes, but it was then developed / enhanced prior to onward sale.

But P's reply, while correct in absolute terms, does not take the possibility of main residence relief into consideration, and how that might affect the gain. If the querist had nowhere else to live while occupying the flat for 2 years, then there is a good chance that the chargeable gain is limited to the period of letting - but lettings relief may then apply, as would the "last 18 months deemed occupation" rule, with the result that the net chargeable gain could be quite small.

REgards all,

Lambs

[AdamS93]

We have been told that you pay CGT from what it was valued at when you let the property. So as it was valued at £400k when you let it out, you would only pay on any profit above that.
We were told that last year.

You were told incorrectly - probably by someone outside the tax/accounting profession I am guessing - Mortgage advisers and Estate agents are the main culprits from experience.

I have noticed you are not the OP, but PPR relief and letting relief seems to be relevant to the OP.

[AGoodman]

PPR is proportionate, the only values that are important here are the original price and the selling price.

In this case you should benefit from:

(a) "vanilla" PPR for the period you were in residence and the final 18 months;
(b) lettings relief PPR for the period it was let (capped at the lower of the gain covered under (a) or £40,000) - but avoiding any overlap with the final 18 months.

You don't mention the date you bought so it isn't possible to approximate (a) or (b)