quick capital gains question on 2nd home

[V8A*ndy]

OK maybe stating the obvious but want to be 100% sure

I'm about to buy another home to renovate and move into and the wife and I are thinking of renting out our current town house when we move.

We bought the town house in the boom so it's worth a lot less than what we paid for it.

I'm I right in saying we don't pay any CG if we sell it below what was paid for it as I can't see it returning to 2007 value anytime soon.

There is also no mortgage on the home.

[anonymous-user]

Yes, if there's no gain then there's no CGT.

[Ozzie Osmond]

V8A*ndy said:

We bought the town house in the boom so it's worth a lot less than what we paid for it.

You should consider declaring it to HMRC for Capital Gains Tax.

It sounds as though you have made an "allowable loss" which can be carried forward to be set against any taxable capital gains which you may make in the future.

When you sell the house your loss is calculated along these lines,

Price paid for house £200,000
Stamp duty paid on house £10,000
Solicitor's fees on purchase £1,000
TOTAL COST = £211,000

Selling price of house £180,000
Estate agent fees £2,500
Solicitor's fees on sale £1,000
NET PROCEEDS OF SALE = £177,500

CGT loss to carry forward = 211,000 - 177,500 = £33,500

With CGT being charged at 28% this loss could save nearly £10,000 of tax at some point in the future.

You need to declare the loss when you sell the house - you can't wait 5 years and then do it if you happen to make some gains elsewhere.

[Cliftonite]

Inkyfingers said:

Yes, if there's no gain then there's no CGT.

If only that were true! Have you not heard of inflation? (But the OP is safe).

Another Gordon Brown / Alistair Darling con trick was to ensure that CGT is payable on bigger numbers rather than just on real increases in value.

Edited by Cliftonite on Tuesday 10th November 20:41

[V8A*ndy]

Great advice thanks guys. I'll let the accountant know before we move (if it happens).

Thing is the house is worth around 100k less than what was paid for it 8 years ago, so I'd be showing a hefty loss

[Grandad Gaz]

V8A*ndy said:

Thing is the house is worth around 100k less than what was paid for it 8 years ago, so I'd be showing a hefty loss

Wow, must have been a big bloody house if you are still 100k down!

[V8A*ndy]

Grandad Gaz said:

V8A*ndy said:

Thing is the house is worth around 100k less than what was paid for it 8 years ago, so I'd be showing a hefty loss

Wow, must have been a big bloody house if you are still 100k down!

Northern Ireland property bubble

It burst in a very big way.

The house we sold to buy it went for mega bucks to. Prices are on the up now though after an extended depression.