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Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Hello, Just to check, is the CGT based on difference of the

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Just to check, is the CGT based on difference of the property purchase price and its actual selling price rather that how much 'profit' or financial gain when sold? I have a rental property that was purchase at £145K 4 years ago. The mortgage was £101 originally and I have been making overpayments and it now sits at £90K. For example if i sold the property in future years at, say, £200 and only had a mortgage of £50K, would the CGT be based on the 55K difference (sold price - purchase price) or 150K difference in actual cash return??
My plan was to keep chipping away at the interest only mortgage to increase a profit in future years as a form of pension lump sum. Would this be good or best to just leave the mortgage higher and profit just on property price rises over the same 10-15 year period?
Hi Dave
Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.
That's right the capita gain is the sale price less the purchase price, the amount borrowed has no bearing unless on the occasion when a remortgage might have been made, and this can sometimes be taken into consideration.
But in your case, the value of the property when originally bought is the key figure to be deducted from the final selling price (which if less than market value, then the market value price is considered)
A for your pension position, I am sure you can appreciate that we are tax experts and not financial advisers, and I would therefore urge you to seek advise from an independent financial adviser - which will not cost you anything. And they are more knowledgeable in growth rates and the current market position with pension funds, versus the chipping away at the mortgage you are undertaking.
But in my humble opinion, property value growth still outweighs the growth of a pension plan.
let me know if you have any follow up questions
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