Investment Residential Property Disposal
Discussion
My wife is looking to dispose of at least two investment residential properties held in her name, from which she will make a conservative estimate of around £100k profit on each should they sell.
She is currently a lower rate tax payer, so in my limited knowledge will likely fall in the 18% CGT tax band upon sale.
My question is: Does it matter if she chooses to dispose of both properties in the same FY? Would each property will be treated separately and therefore would be liable at the 18% rate and not move her up to the higher rate of say 24%?
Anything else to consider if disposing of both properties in the same FY and any benefits to disposing across different FY's?
There is a 3rd property which she will inherit from an estate and will likely have the title to it in 2026. If all 3 were disposed in the same FY, again any tax issues?
She is currently a lower rate tax payer, so in my limited knowledge will likely fall in the 18% CGT tax band upon sale.
My question is: Does it matter if she chooses to dispose of both properties in the same FY? Would each property will be treated separately and therefore would be liable at the 18% rate and not move her up to the higher rate of say 24%?
Anything else to consider if disposing of both properties in the same FY and any benefits to disposing across different FY's?
There is a 3rd property which she will inherit from an estate and will likely have the title to it in 2026. If all 3 were disposed in the same FY, again any tax issues?
Edited by samkings on Thursday 9th October 10:26
My understanding is the first £50,270 of profit in any tax year would be taxed at 18% and any profit above that amount be be taxed at 28%.
However, if you are earning, say £25000 pa through your regular employment then only the difference between your earnings and £50,270 would be subject to the 18% GCT rate.
In this example £50,270 - £25000 = £25270.
CGT on the profit would be £25270 @ 18% and the profit above that taxed at 28%.
The first £3000 of profit is tax free. Purchase, disposal and improvement but not maintenance costs, are also deductible from the overall gain to give you your taxable profit figure.
Rates likely to change in November's budget though!
However, if you are earning, say £25000 pa through your regular employment then only the difference between your earnings and £50,270 would be subject to the 18% GCT rate.
In this example £50,270 - £25000 = £25270.
CGT on the profit would be £25270 @ 18% and the profit above that taxed at 28%.
The first £3000 of profit is tax free. Purchase, disposal and improvement but not maintenance costs, are also deductible from the overall gain to give you your taxable profit figure.
Rates likely to change in November's budget though!
Currently thinking of disposing of my BTL and yes the CGT hurts at 24%. Considering the tax on the rent and the CGT when you sell, it seems like it is actually a pretty poor investment compared to just sticking it into a tracker fund for the last 10 years.
I suspect if I had thought about it properly I would never have bought it.
I suspect if I had thought about it properly I would never have bought it.
ThingsBehindTheSun said:
Currently thinking of disposing of my BTL and yes the CGT hurts at 24%. Considering the tax on the rent and the CGT when you sell, it seems like it is actually a pretty poor investment compared to just sticking it into a tracker fund for the last 10 years.
I suspect if I had thought about it properly I would never have bought it.
Yes, we were "missed-the-boat" BTL investors, came in nearly 9 years ago now, just when the 3% stamp duty came into effect and now of course CGT rates have also gone up in that time and the allowances decreased, together with not being able to write as much mortgage interest off against the yearly tax bill. Lot's has changed, that although it's been very profitable for us, it certainly not like the good old days, though interest rates have been relatively kind for the period we invested. So have seen a decent capital appreciation as well a very good rental yield. I suspect if I had thought about it properly I would never have bought it.
Certainly putting it in a tracker would have been easier, less hassle, less upfront costs and easier to pull your money out when needed. Not sure which would have been more profitable but bricks and mortar always felt the safer "bet" and a £150 - £200k profit (before tax) for two properties with mortgages feels decent, for the 25% equity stake paid.
Anyway that's my personal take and there are lot more learned folk on here than me. Will be debt free by the end of the consolidation plus money freed for the very large extension to our main property. Will be dunking any future income now into accelerating my pension growth and ISA's for me. May retain one property in the short term but ultimately will probably sell up completely.
samkings said:
Anyway that's my personal take and there are lot more learned folk on here than me. Will be debt free by the end of the consolidation plus money freed for the very large extension to our main property. Will be dunking any future income now into accelerating my pension growth and ISA's for me. May retain one property in the short term but ultimately will probably sell up completely.
I am now starting to thing the same way, sell my BTL, pay off my mortgage on my house and have about £90K left over to invest. Having done the maths I think I will be better off each month in the short term, and even taking the increase in value of the BTL into account (which as you say is taxed at 24% when I sell) will be no worse off.That is before the renters rights bill is taken into account, any increases in CGT in later budgets and the apparent hatred governments have for landlords and think we are ripe for the squeeze, without thinking where are all the renters going to live?
It's not my responsibility to house a family, I could do without the hassle and the reward is not really enough.
ThingsBehindTheSun said:
samkings said:
Anyway that's my personal take and there are lot more learned folk on here than me. Will be debt free by the end of the consolidation plus money freed for the very large extension to our main property. Will be dunking any future income now into accelerating my pension growth and ISA's for me. May retain one property in the short term but ultimately will probably sell up completely.
I am now starting to thing the same way, sell my BTL, pay off my mortgage on my house and have about £90K left over to invest. Having done the maths I think I will be better off each month in the short term, and even taking the increase in value of the BTL into account (which as you say is taxed at 24% when I sell) will be no worse off.That is before the renters rights bill is taken into account, any increases in CGT in later budgets and the apparent hatred governments have for landlords and think we are ripe for the squeeze, without thinking where are all the renters going to live?
It's not my responsibility to house a family, I could do without the hassle and the reward is not really enough.
One of which is currently sold subject to contract, another is being refurbished as the last tenant totally trashed it by not cleaning it in five years ...
That leaves us with two which, both of which I am am about to serve notice on and sell.
I've been a Landlord for over 25 years and had originally intended to hold onto 50% of the properties for the long term but, I now I just can't any advantage in doing that.
AlBondigaz said:
One of which is currently sold subject to contract, another is being refurbished as the last tenant totally trashed it by not cleaning it in five years ...
Not being pedantic or judging, genuinely asking, how often were you inspecting the properties ? I would assume twice a year at least, is a norm.
For the contrary view my pal who retired several years ago on a very good FS pension bought a series of residential properties, 1-2 a year. He's up to 9 and they're all let out with BTL interest only mortgages within a limited company. Whilst he hasn't bought a house for a few years he's stuck with the 'problem' taking money out of the Ltd will put him in the 45% tax bracket and lose the relevant allowances. He's now taking a different stance and back on the buying wagon, ideally one a year. Part fund, BTL IO mortgage and take money out of the company to pay for refurbishments. Re-mortgage on the new renovated evaluation and then put that 'surplus' from the new mortgage into his S&S portfolio, maxing out ISA allowances every year.
Money in the business will pay for renovations and bringing the outstanding houses into EPC - C rating category. There's no way he will sell any to pay CGT! It works for him.
Money in the business will pay for renovations and bringing the outstanding houses into EPC - C rating category. There's no way he will sell any to pay CGT! It works for him.
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