Capital Gains

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jaycee401 | 14:38 Sat 30th Aug 2014 | Property
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im selling a property I rent out, bought at an undervalue of £88k selling for £135k. Mortgage payment Is £480 and rent received is £525. I also pay £30 per month building insurance. Will I pay capital gains and do I have to sort this or will the solicitor at completion?


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I remortgaged for home improvements so mortgage outstanding is £112k
Your accountant is your best friend, JC. That's who you need.

With Capital Gains, the tax is on the "gain"... the difference between the buying and the selling price. Since you've re-mortgaged, that has to be taken into account.
You're, in effect, winding up a business. An accountant puts all the figures together to arrive at your tax position.
I'm fairly sure that the rent received and insurance payments will be irrelevant in the working out of your capital gains, as these should have been declared every tax year as income and expenses. The interest on your mortgage repayments will also count towards expenses to offset against your rental income.
Your capital gains is the difference between the selling price and the total outlay for the property (buying price plus any costs incurred for renovations, etc).
For this coming tax year, the CGT allowance is £11 000 - any gains over that will be taxable at either 18% or 28%.

A solicitor will not sort this - you need an accountant, as The Builder suggested.
Agree with the two above.
You need to clearly separate the income versus expenses you have been incurring during the letting from any capital improvements you have made during your ownership.
The former are part of what you should have been declaring as income to HMRC, and paying income tax if appropriate.
The latter are part of the capital gain you have made, less any improvements made and Gizmonster has correctly outlined the calculation you require to undertake to assess the capital gain. This needs to be declared on your self-assessment tax return for the year in which the sale occurs.
Question Author
Cheers folks im going to see an accountant, far too complicated for me.

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