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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
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I have a £65k capital gain on a property I am thinking of

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I have a £65k capital gain on a property I am thinking of selling. How can I reduce the tax bill?
Assistant: What are the assets or property for this capital gain?
Customer: It is a property I have owned and rented out for the last 10 years
Assistant: Anything else you want the Accountant to know before I connect you?
Customer: I have a number of related questions, but they are all around reducing my cgt

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Thank you for your question..

Please advise

- total period of ownership

- period the property was lived in as your main residence or has it always been rented out

- is it jointly owned or in sole name

- any capital improvements and nature of improvements

Many thanks

Customer: replied 1 month ago.
Bought house £135k sole ownership, tenant been in it until last monthExpect to sell it 10 years later at £200k and will earn £25k income this year through my job.So £65k capital gainsI know we can reduce this by the legal costs and stamp duty when we bought it and the legal fees when we sell it.How else can we reduce the CGT?We have just spent £1k on new carpets. Can this reduce the capital gains?
Last year I took out a mortgage on the property? Can I reduce the capital gains for
- Costs incurred in taking out the mortgage?
- Interest on the mortgage?
- Redemption penalties on the mortgage?Can I gift 6% of it to my husband to use his CGT allowance?Can I gift 6% to my 16 year old daughter to use her CGT allowance?
Any implications of this at a future date for her?Can I gift 6% to my 14 year old son to use his CGT allowance?
Any implications of this at a future date for him?Any other ways of reducing the CGT I need to pay?If I move into it now (I currently leave in another property I own, what reduction in capital gain can I make?

Thank you for your reply.

It appears the property has been let for all the time you have owned it. This restricts reliefs available to you as the property is not deemed private residence/main residence.

You can certainly gift a percentage of your share to your husband to mitigate CGT but you should allow some period between transfer of share and eventual sale to avoid scrutiny by HMRC.

Any transfer of share to your children would have to be at market value (not that cost effective). A minor under the age of 18 can't own land or property in the UK so it would have to be owned in trust by trustees, e.g. parents, for the beneficial ownership of the 13-year-old. ... But it must be remembered that the child cannot be prevented from having the property put into his own legal ownership at age 18.

The costs referred to are not deductible against capital gain but

cost of replacement carpets, interest on loan costs incurred in taking out the mortgage would be allowable against rentail income.

Moving back into the property and making it your main residence would mitigate CGT but you need to stay in the property of a while for it to be effective.

Certainly costs associated with buying and selling the property would reduce the gain and CGT payable.

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.

Hi there

Just checking to see if you need more clarification/information or have I answered your question.

Many thanks.

Hi there

Just checking to see if you need more clarification/information or have I answered your question.

Many thanks.

Customer: replied 1 month ago.
Thanks. That’s all I need

Thank you for your reply

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