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bigduckontax, Accountant
Category: Tax
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Other than my primary residence I have two BTL properties.

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Hi, Other than my primary residence I have two BTL properties. Both the BTL properties are for the benefit of my wife and daughter. Because of mortgae lender requirements both properties are only in my name. We hope to sell one of the properties next year with a probable gain of £40k over the purchase price. What can I do regarding CGT?
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. To quote the Late Paul Daniels, 'Not a lot!' However, all is not lost. You have an Annual Exempt Amount (AEA), not cumulative, of 11.1K so your gain is reduced to 28.9K. Then you have Lettings Relief, (LR) available up to 40K depending on the rentals received. The gain you quote at 40K should actually be the difference between the acquisition and the sale price. The acquisition price is what you paid plus purchase costs including Stamp Duty Land Tax (SDLT) plus any enhancements eg installation of double glazing, central heating extension etc, but not routine maintenance which is allowable against rental income for Income Tax (IT) purposes. The selling price is the net sum received after deduction selling costs including advertising. Taking a true gain calculation and AEA and LR you could well find yourself with no CGT to pay at all. If there remains a taxable gain then the rate is 18% or 28% or a combination of the two rates depending on your income including your gain the the tax year of sale. A worst case scenario, assuming no AEA and no LR and maximum rate of tax would leave you with a tax bill of a tad over 11K, but, as I have explained, there might be no bill at all. I do hope that I have shed some light on your situation.
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