property tax

[pops]

I have just baught a buy to let property and have been told that i will have to pay 40% on any proffit i make is this true.

I have also been told to avoid this i can give the property to my 3 children as a gift is this also true.

[NoGood Boyo]

First pensions, now property, pops. As perhaps with the last question, what you "have been told" is general and probably erroneous, depending on your situation. Visit the site of the Association of Rental & Lettings Agents (ARLA) and you will gain valuable information about buy-to-let and the tax implications.

[Miss Zippy]

You would potentially be liable to pay Capital Gains Tax (CGT) on any profit you make on the sale of the property.  However, everyone has a CGT allowance which is currently �8,200 p.a., so you only pay CGT on any profit above �8,200 (this allowance is usually increased each year in the budget).  However, taper relief applies to CGT.  Basically, taper relief 'rewards' long term investors by taxing them less for any profit they make on assets that have been held for a long time.  For instance, if you kept your property for 10 years or more, you would only pay CGT on 60% of your profit (that is above your annual allowance), rather than pay CGT on 100% of the profit.  If you gifted the property to your children, then you would avoid CGT but your children would not if they disposed of the property and made a gain. 

[NoGood Boyo]

True, Miss Zippy, but more complicated than that. Sorry, the R in ARLA is 'Residential' not Rental.

[Miss Zippy]

I know it's more complicated No GoodBoyo,but I'm just trying to give an overview of the position! 

[pops]

I would like to thank all for your help in this matter and would ask you all not to be in conflict due to my questions as the answer bank is there for an informed choice of answers and all are welcome.

 

Many Thanks to you all again and please wait for the next installment from pops, 

[Peter Pedant]

Popsie Popsie

I read your q and thought this is a question about CGT. Miss Z and NBG have given good answers.

Dont forget to double "your" CGT alowance to da daaa ..16 400 by assinging half the property to be sold  to Mrs Pops before selling.

Oh and you need an accountant - with property lettings dont try to do it yourself. I dont

[pops]

peter pedant

Thank you so much for your answer,  it sounds like you have vast exp in this field and your answer was most welcome.

Thanks again pops