Capital gains tax when selling from a portfolio mortgage?

by Readers Question

13:13 PM, 15th September 2016
About 2 years ago

Capital gains tax when selling from a portfolio mortgage?

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Capital gains tax when selling from a portfolio mortgage?

I wonder if anyone could help me. I’m a landlord with a portfolio of properties with The mortgage works.cgt

I recently sold one of these properties, I came away with a profit of 130k, I would like to use this profit to release another property from the TMW portfolio.

My question is do I have to pay capital gains tax on this profit? OR can I use this profit to reduce the loan on other properties with the TMW?

I would appreciate some advice.

Thank you

Jeanette



Comments

Neil Patterson

13:17 PM, 15th September 2016
About 2 years ago

Hi Jeanette,

I can see the confusion as the TMW portfolio mortgages were one loan and account number taken over the average value of a multiple of properties. Therefore selling one property does not feel like you are paying off the loan.

However CGT is based on the individual profit made on each individual property/title irrespective of any loans you may have secured on it. Therefore the CGT would be the same if you had a portfolio mortgage, an individual mortgage based on one title, or no mortgage at all.

Jeanette Dowling

14:50 PM, 15th September 2016
About 2 years ago

Reply to the comment left by "Neil Patterson" at "15/09/2016 - 13:17":

Hello Neil, thank you for your response, I'm guessing it would have been wiser for me to not take the money (profit) which I put into my bank, perhaps I should have requested the money to be kept by The mortgage works and to reduce the existing loan. Although this seems like the same to me. Either way I'm assuming CGT is still payable.

Neil Patterson

15:02 PM, 15th September 2016
About 2 years ago

Hi Jeanette,

Regardless of what you do with the money you have triggered a CGT event by realising the profit on sale of the property.

Mark Alexander

15:29 PM, 15th September 2016
About 2 years ago

I agree with Neil.

Did you have any difficulties in agreeing with TMW the amount required to release their charge over the property?
.

Jeanette Dowling

15:45 PM, 15th September 2016
About 2 years ago

Hi Mark, strangely enough after reading your outcome with TMW, I was expecting the worse. However, the amount they required was a reasonable amount.... Hence the 130k profit ! I'm now on a mission working out the best way forward with the possible CGT on this amount.
Many thanks for your feedback . I'm an avid reading of 118 and find the site extremely helpful.
A donation has been sent to keep up the good work.

Jon Pipllman

16:50 PM, 15th September 2016
About 2 years ago

You may be able to defer the cgt liability by buying another btl property / suitable business asset.

Whether that suits your plans or not is another matter of course.

Jeanette Dowling

17:16 PM, 15th September 2016
About 2 years ago

Thank you for your comment, I thought this was possible, Im sure companies do this with their profits, i.e reinvest their profits into stock, machinery etc, thus avoiding CGT. As I'm giving the mortgage works my profit to release another property which will remain as a buy to let, albeit mortgage free. Would this not qualify as reinvestment using the profit I had made.

Mark Alexander

17:20 PM, 15th September 2016
About 2 years ago

Reply to the comment left by "Jon Pipllman" at "15/09/2016 - 16:50":

There is no CGT rollover relief available on BTL residential property John
.

Mark Alexander

17:21 PM, 15th September 2016
About 2 years ago

Reply to the comment left by "Jeanette Dowling" at "15/09/2016 - 17:16":

Hi Jeanette

Please re-read Neil's post.

The CGT is payable regardless of what you do with the money.
.

Jeanette Dowling

17:44 PM, 15th September 2016
About 2 years ago

Thank you Neil, I'm grateful for everyone's feedback.
Jeanette

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