Is it worth it after CGT?
It would seem many landlords are selling up, ‘but’ is this where capital gains tax comes in?
As an example:- I have read if a property rises in value to leave £300,000 after taking away purchase price exp’s etc. After the measly £13000, allowance taking into account the capital gains tax thresholds with rates of 20% and 28% respectively the capital gains tax bill would be around £80,000!
Have I got this right?
It would seem the rental income over the years mostly goes to the government by another name!
I believe corporation tax is slightly lower?
Many thanks
Lalo
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Member Since June 2014 - Comments: 1562
12:38 PM, 29th November 2021, About 4 years ago
Alternatively, the property could be re mortgaged and the proceeds spent tax free.
Member Since January 2011 - Comments: 12193 - Articles: 1395
12:57 PM, 29th November 2021, About 4 years ago
Your numbers sound about right.
What part of making paying £80,000 of tax on £300,000 of profit seems unfair to you?
How else can you make that kind of money without paying tax?
Member Since June 2014 - Comments: 1562
1:14 PM, 29th November 2021, About 4 years ago
Reply to the comment left by Mark Alexander at 29/11/2021 – 12:57
Invest in an ISA;
https://www.thisismoney.co.uk/money/saving/article-9291405/Its-never-easier-make-Isa-millionaire.html
Investing the full Isa allowance annually from 1999 to 2020 – a total of £246,560 – and reinvesting the dividends into Scottish Mortgage would have generated a tax-free pot of £2,541,100 by January 31, 2021 – more than ten times the original investment.
Member Since January 2011 - Comments: 12193 - Articles: 1395
1:39 PM, 29th November 2021, About 4 years ago
Reply to the comment left by Monty Bodkin at 29/11/2021 – 13:14
Bitcoin investment over the same term would have been even better. Tax free too through an Estonian Company.
Oh the benefits of hindsight!
Anybody got next weeks lottery numbers? ?
Member Since June 2014 - Comments: 1562
3:23 PM, 29th November 2021, About 4 years ago
Reply to the comment left by Mark Alexander at 29/11/2021 – 12:57
What part of making paying £80,000 of tax on £300,000 of profit seems unfair to you?
Much of that isn’t profit, it is inflation, usually paid for with post tax income. And there is no indexation relief anymore.
If property capital gains were taxed more fairly, I strongly suspect the overall tax take would increase.
Member Since January 2016 - Comments: 297 - Articles: 1
11:01 AM, 30th November 2021, About 4 years ago
Gordon Brown Reduced CGT to 10% and collected enough cash to run the NHS for 90 days!
Increasing taxes often leads to reduce collection of pounds sterling!
Member Since January 2020 - Comments: 102
11:03 AM, 30th November 2021, About 4 years ago
Reply to the comment left by Monty Bodkin at 29/11/2021 – 15:23
Some would argue that a fairer form of taxation would be to use the same rates for CGT as for Income Tax.
Member Since October 2013 - Comments: 59
11:12 AM, 30th November 2021, About 4 years ago
Reply to the comment left by Mark Alexander at 29/11/2021 – 12:57
Hi Mark
Agreed
BUT when I started (a long time ago) I was promised 0% CGT if I held them 15 years (by the government) so I invested lots and held them 15 years. I don’t dispute the government can do as it wishes but it is still immoral and dishonest. The triple lock is just a more recent example. (as an aside) It would be easier if they just said “we want all your money bar a little for you to live on”
Member Since January 2016 - Comments: 297 - Articles: 1
11:14 AM, 30th November 2021, About 4 years ago
Reply to the comment left by Olls63 at 30/11/2021 – 11:03
If the rate were to be the same as income tax then we would all cash in and emigrate.
Investments in Shell Gilette Walmart coca cola instead of uk property and difficult tenants and sit in the sunshine in a tax haven?
Let me think about this?
Member Since April 2019 - Comments: 59
11:35 AM, 30th November 2021, About 4 years ago
Reply to the comment left by Ian Burton at 30/11/2021 – 11:12
Yes, some people make wedding vows and then get divorced as circumstances change 🙂
I would argue that the best allowances that may soon be eroded will be the £20K annual ISA allowance and holiday lets/airbnb with the latter lining up more with BTL. Also same for property held in a company structure for the same reason.