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Hello my name is ***** ***** I will help you with this.
I assume you mean you will re-mortgage the rent free property and pay off the main residence, is that right?
I was thinking that the mortgage company might be able to 'switch' from one property to another, but I suppose that is a question of paying off one and re-mortgaging the other. There is a redemption admin charge of £295.00 on the mortgage and now that I have checked there is only £46,000 to pay off, but even so that could result (in theory) of a capital gain reduction of £8,280 (less legal fees for remortgage - couldn't it?
yes, I am assuming that a mortgage is taken into account when calculating CGT - thus a mortgage on the house I want to sell (i.e. not my main residence) would reduce the amount of the capital gain on that property and hence reduce the amount of CGT payable.
Its bad news then I am afraid.
If you needed to remortgage because you wanted an extension to improve the property or buy a new roof that would be ok
But to simply remortgage to pay off your main home mortgage to avoid CGT would be fraud
HMRC are not stupid, they know people want to minimise tax.
What would have been prudent is to not pay off the rental home mortgage and pay off your primary home
But sadly you are stuck with what you have
So sadly you can't do this as you would still be liable
I am sorry if this is not the answer you want and certainly not the one I want to give you, but I have a duty to be honest
Can I clarify anything for you about this today please?
Yes, sorry, the more I think about it the sillier the idea seems - a friend suggested that a mortgage was deductable from Capital Gains, but if you sold a property whilst the mortgage still totalled more than the increase in value, then you would never pay CGT. Am I right in thinking that a mortgage NEVER comes into the CGT calculation- its paid off upon sale of the property and what is left is the capital gain?
Yes a mortgage NEVER comes into calculation UNTIL it is sold
So for example you buy a house for £100,000 with a £70,000 mortgage.
You sell that house for £150,000 and the mortgage then is £60,000
Your gain is £150,000 less £100,000 = £50,000
The CGT ONLY is applicable for INTEREST payments on the mortgage
Does that clarifty?
* clarify? *
Yes, thank you for your time - it was me being stupid and side-tracked by wishful thinking!
Sorry again, but how does the interest paid on a mortgage affect the CGT? Do I add up all the interest paid over the years and deduct that from the capital gain?