Selling 2nd Property...avoiding tax
02 December 2003, 02:09 PM
#31
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A calm look at the numbers will reduce your dismay!
This is my understanding of your situation hail-hail:
* You've owned flat for 5 years.
* You lived in flat for 1st year.
* Flat empty for last 4 years.
You get any time you lived there more than 3 years ago tax free, plus you get the last 3 years tax free regardless of whether you lived there or no. So your tax exemption is (1+3)/5 = 80% of the gain. Gain is the difference between the price when you sell the property and when you bought it.
So if you've made £100K gain, you will get £80K tax free, and will only have to pay 40% tax on £20K, i.e. £8K tax bill.
This is the worse case scenario, there are other things you can do to reduce it further, e.g. CGT allowance is approx £7K.
This is my understanding of your situation hail-hail:
* You've owned flat for 5 years.
* You lived in flat for 1st year.
* Flat empty for last 4 years.
You get any time you lived there more than 3 years ago tax free, plus you get the last 3 years tax free regardless of whether you lived there or no. So your tax exemption is (1+3)/5 = 80% of the gain. Gain is the difference between the price when you sell the property and when you bought it.
So if you've made £100K gain, you will get £80K tax free, and will only have to pay 40% tax on £20K, i.e. £8K tax bill.
This is the worse case scenario, there are other things you can do to reduce it further, e.g. CGT allowance is approx £7K.
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