Politics1 min ago
Selling A Rental Property To Buy Another.
5 Answers
I was wondering if anyone could please help me with this.
I am considering selling a rental property I have had for 25+ years and intend buying another one or possibly 2 smaller rental properties closer to where I live.
Does anyone know the tax ramifications on this?
I am considering selling a rental property I have had for 25+ years and intend buying another one or possibly 2 smaller rental properties closer to where I live.
Does anyone know the tax ramifications on this?
Answers
Best Answer
No best answer has yet been selected by enfable. Once a best answer has been selected, it will be shown here.
For more on marking an answer as the "Best Answer", please visit our FAQ.The current capital gains tax rate on property is 28%.
Imagine that you bought the property 25years ago for £80k and it is now worth £250k (not an unreasonable gain given the house price rises over the period), you would pay 28% of £170k = £47.6k (tax).
You could avoid paying the tax by selling you current residence (which is not subject to capital gains tax) and living within the rental property as you main residence – and then selling the property with no tax liability.
There are other ways to reduce the capital gains tax, you will need to take advice from a suitably qualified accountant.
Imagine that you bought the property 25years ago for £80k and it is now worth £250k (not an unreasonable gain given the house price rises over the period), you would pay 28% of £170k = £47.6k (tax).
You could avoid paying the tax by selling you current residence (which is not subject to capital gains tax) and living within the rental property as you main residence – and then selling the property with no tax liability.
There are other ways to reduce the capital gains tax, you will need to take advice from a suitably qualified accountant.
This link takes you to Govt website calculator where you can work out any CGT to pay.
https:/ /www.ta x.servi ce.gov. uk/calc ulate-y our-cap ital-ga ins/res ident/p roperti es/disp osal-da te
https:/
My son decided to rent the property he owns and has lived in for ten years, and has bought a house with his new wife to live in. Because he already owned a property the stamp duty on the new house was vastly increased. Check this out before buying another property. I think if you sell the house you are living in, and live in the rental property you already own, for two years, you won't have to pay tax, but please double check this, and check any hefty stamp duty payable, with a qualified accountant.
Related Questions
Sorry, we can't find any related questions. Try using the search bar at the top of the page to search for some keywords, or choose a topic and submit your own question.