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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 7055
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
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If we use the profit from a sale as a deposit to buy our

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If we use the profit from a sale as a deposit to buy our next residential mortgage, can we deduct the amount from profit to reduce capital gain tax
JA: What are the assets or property for this capital gain?
Customer: House with residential mortgage but always been rented out
JA: Anything else you want the Accountant to know before I connect you?
Customer: No
Customer: replied 1 year ago.
Bought house in 2012 at £90000, sold in Oct 2018 for £140000. £60000 reused as deposit for new home purrchase. Would like to reduce capital gain tax as much as possible

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.

You can't offset the gain from first property against investment in another residential property to reduce your gain for capital gains tax purposes, I'm afraid.

As the property was not your main residence, there are no reliefs available against the gain. You claim gains allowance against the gain and rest is chargeable to CGT at 18%, 28% or a combination of both.

I hope this is helpful and answers your question.

Customer: replied 1 year ago.
Thank you for your fast reply. We had used an agent to help us with the buying process of finding and negotiating the property price, which cost us about £3000. We also had a new windows (£2500) and basic refurb(£2000) and the selling fees about £3500. I read that we might be able to offset these fees, would we be right?

Thank you for your reply.

All costs associated with buying and selling the property are deductible against the gain. These would include

- stamp duty on purchase

- conveyance fee and legal charges

- agent's commission on sale

- legal costs for selling the property

As far as expenditure goes, it has to be one of improvement to the property as opposed to general maintenance.

Examples include replacement of all doors and not just one or two, replacing all windows, rewiring the property, new bathroom etc.

Basic refurbishment charges would most likely be challenged if an enquiry made into the tax return.

I hope this is helpful and answers your question.

Hi there

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

Many thanks. and other Tax Specialists are ready to help you

I thank you for accepting my answer.

Best wishes.