Capital gains tax selling a buy to let

[wisbech]

WhiskyDisco said:

Hypothetically speaking, what if the OP sold the property for the same amount he purchased it for. Would he evade the tax, and would this be allowed?

I ask because I bought a house at auction a few years ago, did it up and moved my in-laws in. At the time they sold their house, but they didn't buy my house. They have been living as "tenants" for years. Could I give to them the house for nothing and it all be rosy?

It is allowed, but in that case you need to declare the market value, and pay CGT on that. Ditto your situation - you can gift them the house for free, but still need to pay the CGT on the market value. HMRC are obviously likely to check the market value estimate if it looks you are taking the piss.

Way round it is to gift the house to your spouse, or a registered charity.

[Panamax]

liner33 said:

We are in the same position, our flat is in West London and bought it in 1989, its likely to only get worse under a Labour government

Paying 24% CGT now might be the best deal you'll see in your lifetime!

Previously under Labour any capital gains were added to your income and taxed at full income tax rates. In a world without indexation that could be very uncomfortable indeed, although popular with traditional Labour voters and handy for HM Treasury.

In combination with Stamp Duty these "South of England" taxes are pretty punitive.

[leef44]

wisbech said:

WhiskyDisco said:

Hypothetically speaking, what if the OP sold the property for the same amount he purchased it for. Would he evade the tax, and would this be allowed?

I ask because I bought a house at auction a few years ago, did it up and moved my in-laws in. At the time they sold their house, but they didn't buy my house. They have been living as "tenants" for years. Could I give to them the house for nothing and it all be rosy?

It is allowed, but in that case you need to declare the market value, and pay CGT on that. Ditto your situation - you can gift them the house for free, but still need to pay the CGT on the market value. HMRC are obviously likely to check the market value estimate if it looks you are taking the piss.

Way round it is to gift the house to your spouse, or a registered charity.

Actually if the OP sold the house to the tenant at cost price, it wouldn't be treated as CGT gain at market value. The tenant is third party (not relative). However the OP would have lost out on all his retirement/investment gain of having a London property value rise from 1980's to now and have given that all away to the tenant who would be very happy with that.

A case of tail wagging the dog to save tax.

[WhiskyDisco]

wisbech said:

WhiskyDisco said:

Hypothetically speaking, what if the OP sold the property for the same amount he purchased it for. Would he evade the tax, and would this be allowed?

I ask because I bought a house at auction a few years ago, did it up and moved my in-laws in. At the time they sold their house, but they didn't buy my house. They have been living as "tenants" for years. Could I give to them the house for nothing and it all be rosy?

It is allowed, but in that case you need to declare the market value, and pay CGT on that. Ditto your situation - you can gift them the house for free, but still need to pay the CGT on the market value. HMRC are obviously likely to check the market value estimate if it looks you are taking the piss.

Way round it is to gift the house to your spouse, or a registered charity.

My wife and I are join owners of the house. Bought as a wreck, done up, and now lived in my her parents. I'm wondering if they can gain ownership of it with no cost to us.

[ooid]

Retd said:

I own a house which I currently let out.

I'd like to sell the house to the sitting tenant (at a discount, if that makes any difference) and buy another.

Will I have to pat capital gains tax on the profit that I've made selling my current place even though I'm buying anoher straight away?


Thanks for your help

Can you not release equity from the property and buy the other one? If you are feeling charitable you can always maintain the rental growth lower than the market rate for your current tenants.

It is really not your responsibility to make your tenant home-owner, while they are slapping you with a massive CGT. - imho-

[Retd]

ooid said:

Can you not release equity from the property and buy the other one? If you are feeling charitable you can always maintain the rental growth lower than the market rate for your current tenants.

It is really not your responsibility to make your tenant home-owner, while they are slapping you with a massive CGT. - imho-

My wish was for the tenant to be able to buy the house where he's living. It suits him for a number of reasons. And, if it weren't for CGT I'd be happy to accomodate him.
If he wants to buy - and he should - then he'll have to go to market. Unfortunately, he'll have difficulty finding a place as well suited to him and, to be honest, dealing with estate agents, solicitors etc isn't his strength.

But thanks for suggestion, always good to look at problems from another perspective

Edited by Retd on Sunday 31st March 19:17