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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have a buy to let mortgage of £272,000. I rent it out for

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I have a buy to let mortgage of £272,000. I rent it out for 1,675 a month and pay estate agents fees. My,interest only buy to let mortgage is 532.77 a month ( variable interest) I pay service charges of 209.77 a month and another 20.00 for landlords cover for appliances and breakdowns.
I have been given a current valuation of £460,000 on the property which is a serviced apartment in Brentford London.
I would like to know how much capital gains tax I would pay if I sold it now. I have never lived in the property although my son has. I earn £35,000 a year and presume I will be in the higher tax bracket and therefore subject to paying more tax on the income I receive from this property than previously. Are you able to say how much ? My tenant vacates on 10th Nov and if I were to get another tenant in would not be able to consider selling again till next year so will need to make a decision asap and I would like the numbers crunched if possible.
Karen Broughton

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

How much did the property cost to buy?

Customer: replied 1 year ago.
330,000 I think!


Leave this with me while I do some calculations.

Customer: replied 1 year ago.
Fab. Thank you

You didn't say how much the letting agent fees are each month.

Customer: replied 1 year ago.
I pay them up front . It worked out to one and half months worth of rent approx., its 11% on the contract


If you sell the property for £460,000 having paid £330,000 to buy it, you will make a gain of £130,000. Deduct the annual CGT exemption of £11,100 and you are left with a net taxable gain of £118,900. You can reduce the gain by claiming for buying and selling legal fees, stamp duty, survey fees and selling agent fees.

I have calculated an annual rental profit of £8,297 (£20,100 - £6,393 mortage interest - £2,517 service charge, £240 insurance and £2,653 letting agent fee inclusive of VAT). Pro-rata for the period from 6 April 2016 to 10 November (8 months) the profit is £5,531. Add that to your salary and you have an income of £40,531. That means, you will have about £2,469 of the 20% tax band which can used to tax part of the net taxable gain at 18%. So, your CGT will be about £33,045.10 (£2,469 @ 18% + £116,431 @ 28%). It cannot be taxed at more than 28%.

I hope this helps but let me know if you have any further questions.

Customer: replied 1 year ago.
if I waited till next November to sell, I would be paying more CGT given the new arrangements set by the gov't? ... and therefore it would make sense to sell now?

You cannot pay more than 28% in CGT. If you sold the property for the same price in November 2017 and assming there no changes to CGT law, all the gain may be chargeable to CGT at 28% because of the way that tax relief will be given for mortgage interest from 6 April 2017 so you would pay £246.90 more in CGT.

Customer: replied 1 year ago.
Sorry had to take a work call. If I made this property my sole residence, how long would I need to live in it to prove sole and only residence and would this make a change to CGT when I sold it on after having lived for there for the required period (which might be?)Thanks for your assistance, if you are able to answer this question I will be in a much better position to make decisions.

If a property has been your main home at some point, then you are given the last 18 months of ownership as a CGT free period also. It would also give you access to letting relief which can be worth as much as £40,000 off the taxable gain. See Example 9 here.

There is no set period that you need to live in the property but if I were going to do it, I'd live in it for at least a year. However, if HMRC consider that your main reason for moving in was to avoid paying CGT, they will seek to tax you on the full gain.

Customer: replied 1 year ago.
Thank you.


Would you mind rating my answer before you leave the site please.

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