Selling Buy to let and CGT

Selling Buy to let and CGT

14:03 PM, 3rd January 2017, About 6 years ago 22

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I would like to sell a couple of long term buy to let properties I own in order to purchase another income producing property in another part of the country (Somerset) where I wish to retire too. conundrum

As I understand it even though I intend to use the proceeds of the sale of my properties towards another similar property I will still have to take the 28% CGT hit.

This will make it untenable. I did get excited last year as I found a site advising that you would not have to pay the CGT if you purchased a similar property within 6 months, only to find out this was a Canadian site !

As far as I can see this CGT liability makes it very difficult for any landlord to ‘upgrade’ his portfolio by selling one or more properties in order to purchase another property, either in another area or perhaps a larger property.

Had the CGT rate been more reasonable at 18% I could probably live with this, but at 28% it seems that I will have to sit tight and carry on as is, as there is no way I am going to accept having to loose over 50k in CGT just to relocate.



Chris wood

15:45 PM, 4th January 2017, About 6 years ago

Reply to the comment left by "Adrian Jones" at "04/01/2017 - 15:13":

Its a minefield an you would be probably advised to get an accountant who is familiar with CGT taxation, otherwise you may end up paying too little or too much.
This is a basic tool, but can give you an idea:

Don't forget that any other income you have during the tax year also has to be added into the equation as well, and if you have already paid tax on this it gets complicated even further. If your gain is going to be a large amount pay for an accountant to do it

Michael Barnes

14:10 PM, 5th January 2017, About 6 years ago

Reply to the comment left by "Hamish McBloggs" at "04/01/2017 - 12:58":

It is my understanding that on the death of he owner of BTL property, there is no CGT to pay on the properties but there is inheritance tax on the value of the estate.

Can anyone with real knowledge confirm or deny my understanding?

Adrian Jones

14:15 PM, 5th January 2017, About 6 years ago

Reply to the comment left by "Neil Patterson" at "04/01/2017 - 15:32":

Thanks Neil. I gather you now have to pay any CGT within 30 days of the sale. So if you sell a BTL property, say in May 2017, how can calculate what your income will be for 2017/2018?

Neil Patterson View Profile

14:37 PM, 5th January 2017, About 6 years ago

Good point, but I am assuming they will adjust up or down depending on what you have paid based on last year and what your tax margin ends up as.
However I would ask an Accountant this question.

Adrian Jones

15:13 PM, 5th January 2017, About 6 years ago

Reply to the comment left by "Neil Patterson" at "05/01/2017 - 14:37":

That seems the logical answer but as you (and Chris) suggested I'll run it by an accountant.

Neil Patterson View Profile

15:48 PM, 5th January 2017, About 6 years ago

Yes it is IHT not CGT

Mark Crooks

8:37 AM, 7th January 2017, About 6 years ago

Don't let £50k stop you from actioning your ELP.

My two penneth would be to seek out advice from a few expert property accountants and action a plan now.

Imagine in 10 years that the tax regime 'might' be more favourable. Will you have the energy and enthusiasm to action a plan like you have? The tax regime could even become harsher with a Labour Gov.

Adrian Jones

10:40 AM, 7th January 2017, About 6 years ago

Reply to the comment left by "Mark Crooks" at "07/01/2017 - 08:37":

And you could tell yourself if I've paid £50k tax it means I've made a good profit.

Plus of course you would be moving to a beautiful part of the country!

Yvonne Francis

12:00 PM, 7th January 2017, About 6 years ago

But Adrian you have not made a profit if you pay CGT in terms of property. It's just a depletion of capital if you wish to stay in property. There should be roll over relief in line with many other businesses, but that's another issue.

Chris, I have the same problem but I've decided to stay with my HMO's. I self manage and I'm elderly and disabled, so I'm looking seriously at agents and getting my children involved as it is very much to their benefit. As has been pointed out CGT dies with you with IHT kicking in. That's better that paying CGT and then having to pay IHT on the remainder by your inheritors. Would it not be better to get your properties fully managed if you move away?

As I said to an accountant "I may die off 'em but I'm going to die with them".

Adrian Jones

12:26 PM, 7th January 2017, About 6 years ago

Quite so Yvonne, but it depends on your priorities. I've been in property for many years but am slowly selling them off to enjoy my grandchildren, help out my children and reduce the hassle.

I'm not happy about paying the tax but take the view I've had a steady income (some re-invested elsewhere) and the profits will keep me in a comfortable lifestyle.

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