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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15916
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have a buy to let property that i would like to sell but

Resolved Question:

i have a buy to let property that i would like to sell but am concerned about the amount of capital gains i will have to pay.
i bought it for 93K in 2000. i lived in it til 2005 where i remortgaged to 130k. it has been let ever since with only 6 months where it was vacant. it is valued at 350k this goes up to 400k if i extend the lease. i am a higher rate tax payer
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Can you tell me the month of purchase in 2000, the month you moved out in 2005 when you moved out and when the six month gap started and ended. Was the property available for letting during that period?
Customer: replied 1 year ago.
Hi Tony,
I moved out July 2005, it was empty for repairs from sept 13 to may 14.
thanks
Customer: replied 1 year ago.
sorry misread one of your questions. I bought it in june 2000.
thanks
Expert:  TonyTax replied 1 year ago.
Thanks. Leave this with me while I draft my answer.
Expert:  TonyTax replied 1 year ago.
If you sell the property in May 2016 for £400,000, you will make a gain of £307,000. You can also deduct the costs of purchase and sale (legal fees, stamp duty, survey fees, selling agent fees). Total period of ownership to May 2016: 192 months Period of owner occupation: 62 months Period of letting: 122 months Period of vacancy: 8 months Exempt gain: £127,917 (£307,000 / 192 x 80 (62 + last 18 months of ownership) Letting period gain: 166,292 (£307,000 / 192 x 104 months (122 - last 18 months of ownership) Vacant period gain: £12,791 ((£307,000 / 192 x 8) Gross Non-Exempt Gain: £179,083 (£166,292 + £12,791) Letting Relief: £40,000 (lesser of £40,000, £127,917 and £166,292) Annual CGT Exemption: £11,100 Net Taxable Gain: £127,983 (£179,083 - £40,000 - £11,100) CGT @ 28% £35,835.24 Refer to HS283 for information on the main residence and CGT. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
thats excellent work thank you. one final question if i pay to extend the lease prior to sale is that cost tax deductable.thank you
Expert:  TonyTax replied 1 year ago.
Yes, it will be.
Expert:  TonyTax replied 1 year ago.
Hi.
I'm just following up to find out if my answer helped or if you have any further questions.
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