I've watched several Property Ladder progs on UK TV (and a few others) and they watch someone buy a house, refurbish it, sell it, then say what their profit is. Not once have they mentioned capital gains tax as it wasn't their home... Has something changed? Can you now buy, refurb andsell a house you dont live in and avoid CGT? Sensible answers only plse as I really want to know..
2006-08-16 13:18:06 · 5 answers · asked by Jackie 4 in Business & Finance ➔ Taxes ➔ United Kingdom
You do not have to pay tax as long as:
you bought it, and made any expenditure on it, primarily for use as your home rather than with a view to making a profit;
the property was your only home throughout the period you owned it (ignoring the last three years of ownership - i.e. you can have more than one property for up to 3 years);
you did actually use it as your home all the time that you owned it and, throughout that period, you did not use it for any purpose other than as a home for yourself, your family and no more than one lodger. If you rent it out after renovating it, then you will be liable to Income Tax, but not CGT (for that 3-year period);
the garden and area of grounds sold with it does not exceed 5,000 square metres (about one and a quarter acres) including the site of the house.
Tax on property that’s not your main home:
You will normally have a chargeable gain if your property is worth more than you paid for it when you sell or dispose of it. However, the first £8,800 of your total taxable gains are tax free (tax year 2006-2007).
It’s worth bearing in mind that:
when working out the chargeable gain you can deduct some of the costs of buying, selling and improving the property;
if you have made a loss on the property, you may be able to set that off against other chargeable gains you may have.
2006-08-16 23:52:17 · answer #1 · answered by nige_but_dim 4 · 0⤊ 0⤋
If you have more than one property and sell one for a profit, you don't pay capital gains tax on the property you are living in. As long as they can prove the house they renovated was the house they lived in for a definite period of time (I think 6 months by showing council tax and utility bills) then they are not liable to pay capital gains tax on the profit.
Having said that, that rule applies to the general public not professional property developers (they are treated like any other business i.e. have to declare all profit and pay tax on that at the end of the tax year)
2006-08-16 13:27:15 · answer #2 · answered by Anonymous · 1⤊ 0⤋
As far as I know as long as you keep re-investing the money back into property and dont take your profit out you dont have to pay,however as soon as you sell and dont re-invest then if you have made more than £270,000 soon to rise to £310,000 you pay 40% on the excess.
2006-08-16 13:25:53 · answer #3 · answered by any 4 · 0⤊ 0⤋
Nothing changed, capital gains tax is still there...
2006-08-16 13:29:42 · answer #4 · answered by NC 7 · 0⤊ 0⤋
depends what as a self employed person you can write off against tax.
2006-08-16 13:24:32 · answer #5 · answered by g8bvl 5 · 0⤊ 0⤋