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Sam
Sam, Accountant
Category: Tax
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I own the property my aged mother lived in. In order to support

Resolved Question:

I own the property my aged mother lived in. In order to support her I took a mortgage out on a property half a mile away (58,000) interest only. When I sell the property she lived in and redeem the mortgage will I have to pay capital gains? It will sell £74,000.
I'm trying to decide whether to rent it out or sell it. Any advice would be much appreciated.
Regards,
Pauline Bailey
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Pauline
Thanks question, I am Sam and I am one of the UK tax experts here on Just Answer.
I am assuming this property was purchased after 06/04/1988 so sadly this disqualifies it being considered relative relief, so yes there will be a capital gain arising on you.
This will be formed by the sale price less the purchase price which forms the initial gain, and from this initial gain you can then deduct the costs to buy (so legal fees, etc) the costs to sell (so legal fees, estate agent fees etc) and also the costs of any capital improvements, such as new kitchen, new bathroom etc
The figure left over, then has the first £11,000 exempt, as this will be your annual exemption allowance, and any final gain remaining is then subject to capital gains tax, the rate of which is 18%, 28% or a mix of both.
If you would like to advise your annual income, I can then advise what amount will charged at what rate.
If you go onto to rent it - there still will be a future capital gain, which will be greater than it is now, as the property will naturally increase further in value, and rental income must be declared to HMRC.
Thanks
Sam
Sam and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Sam,

That's nice and clear. I thought that as I was redeeming a mortgage it may be different. In the light of this information I may sell the cottage instead, settle the mortgage, and keep the flat.

Has your test gone to my email address so I can save it?

Regards,

Pauline

Expert:  Sam replied 2 years ago.
Pauline
Thanks response
You are very welcome, and if you entered an email address when you set up the Just Answer account, then I am sure an email is sent to your address, however I do know that the thread of this full Q & A session remains under "My Questions" (on the top left hand side) when you log on, which you can copy or paste onto a word document if an email has NOT gone to you.
Let me know if you need any amore advise on this matter, but it would be appreciated, if you could rate the level of service I have provide4d (or click accept)
Thanks
Sam