Capital gains tax when selling from a portfolio mortgage?
1:13 PM, 15th September 2016, 10 years ago
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I wonder if anyone could help me. I’m a landlord with a portfolio of properties with The mortgage works.
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
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Member Since February 2011 - Comments: 3453 - Articles: 286
1:17 PM, 15th September 2016, About 10 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.
Member Since August 2015 - Comments: 5
2:50 PM, 15th September 2016, About 10 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.
Member Since February 2011 - Comments: 3453 - Articles: 286
3:02 PM, 15th September 2016, About 10 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.
Member Since January 2011 - Comments: 12207 - Articles: 1403
3:29 PM, 15th September 2016, About 10 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?
.
Member Since August 2015 - Comments: 5
3:45 PM, 15th September 2016, About 10 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.
Member Since August 2015 - Comments: 287
4:50 PM, 15th September 2016, About 10 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.
Member Since August 2015 - Comments: 5
5:16 PM, 15th September 2016, About 10 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.
Member Since January 2011 - Comments: 12207 - Articles: 1403
5:20 PM, 15th September 2016, About 10 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
.
Member Since January 2011 - Comments: 12207 - Articles: 1403
5:21 PM, 15th September 2016, About 10 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.
.
Member Since August 2015 - Comments: 5
5:44 PM, 15th September 2016, About 10 years ago
Thank you Neil, I’m grateful for everyone’s feedback.
Jeanette