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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4972
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am interested in buying an offplan deal which is due to complete

Resolved Question:

I am interested in buying an offplan deal which is due to complete in June 2017. It is currently priced at £208000 and I will have to put a 25% deposit down of roughly £52000. I currently earn £45000 before tax and have one other Buy to Let. I was wanting to hopefully sell the offplan deal to another buyer before it completes for hopefully £260000 so I won't have to pay Stamp Duty once the build is finished. I understand I will have to pay CGT, but unsure how much it will be. On the information i have give you could you tell me how much CGT I would have to pay and any other tax implications that would be deducted from my gross profit if I were able to sell the offplan deal before completion?
Submitted: 1 year ago.
Category: Tax
Expert: replied 1 year ago.
Thank you for your question.Please advise what you are likely to get by selling the offplan deal. You will be putting 25% deposit (i.e. £52,000).Many thanks
Customer: replied 1 year ago.
If the property were to sell for the estimated market value price of £260k then that would hopefully be a £50k gross profit.
Expert: replied 1 year ago.
Thank you for your reply...Assuming your gain from sale of offplan deal is £50k, your chargeable gain after gains allowance would be (50,000-11,100) £39,900.Your income after personal allowance is £34,000.. so some of it is attracting income tax at 40%.Your capital gain is arising from sale of a residential property that is not covered by private residence relief and therefore a CGT rate of 28% would apply to £39,900 (as your taxable income takes you into income tax higher rate band.Likely CGT is (39,900 x 28%) £11,172.There should be no other tax implications relating to this transaction. I hope this is helpful and answers your question.If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.
Customer: replied 1 year ago.
Thank you for the detailed response. I did mention that I also have another single Buy to Let which is currently netting me a passive income of £11400 a year (£950 rent per month). I assume because I have this other investment it will boost my current yearly income from £45000 to £56400. Even though this may be the case could you please clarify if this will affect how much CGT I have to pay or will it still be the same as you already specified?
Expert: replied 1 year ago.
Thank you for your reply.The additional income would affect your income tax bill and not CGT payable.I hope this is.helpful.
Customer: replied 1 year ago.
Thank you. I have one other question.
Can I offset the solicitors, agents fees, etc from the sale of the property as well or can this be only done on my tax return at the end of the financial year?
Expert: replied 1 year ago.
You can deduct solicitor fee and agents charges etc from the gain in arriving at net chargeable gain. I hope this is helpful.
Customer: replied 1 year ago.
Thanks. But do I claim this on my tax return with my accountant? I don't understand what you meant by "from the gain in arriving at net chargeable gain"?
Is it true that I need to see a tax accountant to lodge my tax return when I have an investment property or can I do it myself? Will a personal accountant be able help me offset certain fees and help me save/claim on things that I otherwise could miss due to not being a specialist in this area?
Expert: replied 1 year ago.
Thank you for your reply..If your affairs are not complex there is no reason why you can't lodge your tax return yourself.You should make sure you have claimed all allowable expenses against rental income relating to your investment property when filing your tax return. If you get stuck you can always come back here and ask for me to assist you with completing your tax return.When calculating capital gain on offplan deal add all costs associated with buying and selling e.g. solicitors and agents charges and take this figure from the gain (selling less buying price) and the net result would be your chargeable gain before gains annual allowance. I hope this is helpful and answers your question.I will appreciate if you would kindly rate my service/accept the service I have provided before you leave the site, to ensure I get credited for it by Just Answer.
Expert: replied 1 year ago.
Hi there, I hope I have addressed all points raised by you. If you are unclear on any aspect, please do come back. and 3 other Tax Specialists are ready to help you

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