Tax

Discussion in 'Motorhome Chat' started by Bart, Aug 28, 2016.

  1. Bart

    Bart Funster

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    Thinking on selling our house and going full time but wanted to know the following
    If we sell our house that we have lived in for 20+ years and been mortgage free for the last few years will we have to pay tax on the money we get from the house ?
    Edit : the house is not in London so we will not be talking telephone numbers >><<
     
  2. MH 55 FUN

    MH 55 FUN Funster

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    No tax is payable.
     
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  3. pappajohn

    pappajohn Funster Life Member

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    No, you dont pay tax on your permenant residence no matter how much profit is made on the sale.
    If it was a letting property or second home you would pay capital gains tax on any profit made, minus certain allowances.
     
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  4. vwalan

    vwalan Funster

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    just remember money in the bank is earing nothing at the moment .
    but should house prices go on the up you might never be able to get one if you spend the money.
    unless you think your going to pass away soon keeping property can be a far better way of making an income and gaining value as you make it .
    think hard many have sold and lived to regret it .
     
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  5. houdini

    houdini Funster

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    Another point to perhaps consider, have read threads where people want to full time and they have problems with various authorities re insurance etc. as they no longer have a residential address they can use.
     
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  6. Bart

    Bart Funster

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    there are places out there , plus if i ask a family member im sure they would assist ,,, hopefully......
     
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  7. Bart

    Bart Funster

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    Yar i know that ,, that is why if we sell we would prob buy something about 2/3rds the price of what we sell for and then rent out said newely purchased property ,, as plan "B"
     
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  8. Bart

    Bart Funster

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    Thanks all for putting my mind at ease,, i was sure i would not have to ,, but many minds = better :)
     
  9. DanielFord

    DanielFord Funster

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    Pappajohn is totally correct CGT does not apply to main/permanent residence
     
  10. pyro

    pyro Funster

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    I would take advice from a professional accountant and/or solicitor. Many old fashioned estate agents deal with lettings, and they may be willing to give you some free advice. Just remember that you need someone to sue if it all goes Pete Tong.

    The laws on this are fairly complex. Good info here: http://www.which.co.uk/money/tax/guides/capital-gains-tax-explained/capital-gains-tax-and-property/

    For example, you will not pay CGT (tax) on the sale of your (main or only) residence under what is known as the PRR (private residence relief). However, of you are not living in the next house you buy, and then rent part or all of it out, then you will be liable for tax on the rental income as is the case with any landlord. The other problem is that HMRC could argue it is a commercial enterprise unless you move in at some stage, and therefore you could well be liable for CGT on any profit when it comes to selling that.

    Remember that the Land Registry (who control property transfers) is "an executive arm" of HMRC, meaning HMRC know what you own, what you buy it for and what you sell it for. Best to plan ahead
     
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  11. Theonlysue

    Theonlysue Funster Life Member

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    Selling your home will not be liable to any tax.
    If you rent your new one our via an agent, the agent reports to the inland revenue that the property is rented out.
    The rental income forms part of your income for the year, so you'll be allowed to earn so much before paying tax.
    Also, any charges for a rental agreement , electric and gas certs, insurance, can all be offset against your rental income.
     
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  12. Bart

    Bart Funster

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    Yip , this is what i thought , as it would be an "income" , however i new thought about things like insurance etc being offset against the income. :)
     
  13. Puddleduck

    Puddleduck Funster

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    No tax on the sale of your principle private residence ..... then you buy to let, tax payable on income over your tax free allowances. CGT payable on profit from the buy to let house when you sell it unless you move in and make it your principle private residence before you sell - how long you have to live in it isn't specified.
     
  14. vwalan

    vwalan Funster

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    suit, car, telephone , stationary, costs of looking at other properties you might think of buying . ferry to france as you are thinking of buying a house to let in france or spain .
    its a hard life being a landlord always on the go.
     
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  15. pyro

    pyro Funster

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    As previously (experience)

    If you claim it as a business, and offset your costs, then you expose yourself liability for other taxes (CGT, CT, and income tax). Best to plan ahead with professional advice

     
    Last edited: Aug 28, 2016
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  16. Minxy Girl

    Minxy Girl Funster Life Member

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    No tax is payable by you when you sell your main residence, the profit is all yours! :)

    If you buy another property and rent it out then any rent received, less allowable expenses, is classed as income and is added to all your other income, ie from savings, investments, pension etc, so if this takes you over your personal allowance you will be liable for tax at 20% or more if you get a higher income overall.

    When you come to sell this rental property you will be liable for Capital Gains Tax assuming the difference from what you paid and what you sell for (less allowable expenses) is above the CGT allowance at the time, however if you move in once your tenants leave I believe there is a reducing scale of how much you have to pay in CGT depending on how long you then live in it before selling. I did look into this myself as we have a rental bungalow and wanted to know the tax situation if we sold it but it was a while ago so don't know the figures off hand.

    Despite what vwalan has said, AFAIK you cannot offset the cost of 'looking' for a property to buy from your tax bill, it is only when you own it that you can deduct the costs of purchasing it (ie solicitors, surveys etc) otherwise everyone would be 'looking' for one all the time and get a tax allowance for 'holidays'!

    You are able to deduct various expenses associated with the purchase of a property from your gross rental income such as:

    Letting agent fees, contract and inventory fees, credit check costs, solicitors fees, any other costs associated with the initial purchase and furnishing/equipping it such as carpets, curtains; ongoing costs for insurance, repairs/maintenance can also be offset as can mortgage interest* (yes I know you don't want one but just for completeness), insurance, the cost of any certificates required, gas/electric testing etc, plus mortgage interest* payments (* the allowance is reducing from the next tax year (2017-18) so you'll only get it on 75% of the interest, then 50% (2018-19), 25% (2019-20) and from 2020-21 no allowance at all for mortgage interest).

    http://www.telegraph.co.uk/investing/buy-to-let/nine-ways-to-increase-your-buy-to-let-profits/

    https://easyproperty.com/what-expenses-can-you-claim-on-buy-to-let-property/

    One thing you have to watch for though is the new 'landlord' surcharge/tax that came in this year - this means that if you buy a property purely for letting out you have to pay 3% on top of any other stamp duty - whilst the stamp duty doesn't kick in until £125k, for B2L properties the 3% is applied for any property over £40,000!


    What this means in reality is that you'd be better off moving INTO the new home when you buy it for a while and ONLY THEN deciding to let it out ;) ... don't go telling any estate agent etc that you will DEFINITELY be renting it out though, but can obviously say you're thinking about it! As you would be moving in having sold your original home, it would then qualify as YOUR main residence, rather than a purely B2L investment, so no 3% surcharge to pay! (y)
     
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  17. pyro

    pyro Funster

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    Good catch there. Agreed with all.
     
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  18. vwalan

    vwalan Funster

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    well come on you cant book holidays .
    but business trips you can .
    it takes along time on some trips as there is so many places to see.
    how does any business grow if you dont make exploratory trips to see whats happening .
    richard branson etc dont get free flights on airoplanes i,m sure . mind i might be wrong after all all top business men and women are honest.
     
  19. Minxy Girl

    Minxy Girl Funster Life Member

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    For a normal business maybe but a B2L property owner would be very hard pushed to try to explain why trips abroad were needed!
     
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  20. vwalan

    vwalan Funster

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    looking to expand to be a european letting agency.
    live the dream.
    most big business,s started small.
     
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