hail-hail

Ok folks, the time has come to sell of my 2nd property, to fund a nice big M5. The problem is Mr Taxman will get his claws into anything I make on it, which will be a substantial sum.

Any ideas on how to avoid paying this tax.

Basically I have two properties

1. A house that is joint mortgage with me and the wife.
2. A flat that is mortgaged by me only.

If I sell the flat I get nailed by the taxman, that is pretty much all I know.

I am happy to sign the house over to a the wife / a friend / my parents etc but if I do this will I need to settle my current mortgage?

Could I consolidate both mortgages? The equity on the house far exceeds the value of the flat mortgage, so I could remortgage the house and pay off the flat mortgage, making the signing over process easier.

Loads of thoughts running through my head but really need some advice.

messiah

AFAIK - to avoid the taxman, YOU have to have lived there for 12 months.

Scooby96

Simple - the wife 'kicked you out a year ago' and you've been living in the flat - as its your main residence then you're not liable for CGT

hail-hail

I have lived there for over 12 months, albeit about 5 years ago, i basically moved job, couldn't sell the flat, couldn't be bothered renting it, so it has been empty for about 5 years.

I would prefer to stick to something 'legal' as tax fraud is a jail time crime

hail-hail

Incidently, any idea how much tax I am liable for?

Tiggs

"I would prefer to stick to something 'legal' as tax fraud is a jail time crime "

good luck with adice from here then.

Tiggs

hail-hail

Know what you mean Tiggs, lol

I am waiting for the "Stab the taxman and fly to Columbia" type posts

Scooby96

You've left it empty cos you couldnt be arsed to rent it out - FOR 5 YEARS!!!!!!

Go 'live' there for 12 months from now then sell it this time next year.

I think CGT is 40%

WiseGuy

I believe CGT is currently 40 % and I don't think signing you house over to the missus helps as she would need to be the only one on the mortgage for over a year.
Basically your stuffed

blair

I'll get the caveat in early - it's been ages since I sat any tax exams so you miht want to double check this.

You'll be liable for tax at the top rate you pay on the gain made between the date purchase price and the date of sale.

This is adjusted if you have lived in it / used it as a principal private residence for any point - i.e if you owned it for 10 and lived in it for 5 then only half the gain is taxable (5/10ths). I seem to recall some additional "funnies" like the lsat year of ownership was always treated as though it was your PPR and so in the above example you would get 6/10ths of the gain chargeable to tax

You get a CGT allowance (about £7k) each year like your personal allowance - if the flat is owned by you and your wife then you each get the allowance so 14k would be exempt instead of £7k

You also used to get indexation allowance (basically increased the purchase cost in line with inflation) and now get an allowance depending on how long you have owned the house for (I think)

You can also take into account all costs of selling to reduce the gain

The Inland Revenue used to have a leaflet on CGT and 2nd homes - have a shoofty at their website for more accurate guidance than my poor effort

HTH

messiah

have you been getting any post sent there even though you're not residing there? If you have it may help to prove it's been your residence.

hail-hail

This country does my **** in, i payed 40K to the fecking taxman last year on my salary.

Anyone point me in the direction of a "good" accountant, I am stick of being bend over and shafted by this country :feckingbloobdyangry:

TopBanana

I'd seriously think about moving back in for a year... sounds like it'd be worth tens of thousands of pounds to do so. I know what you mean about the tax regime. Luckily, I hardly pay any at all - which is nice.

hail-hail

Problem is the fecking flat is 150 miles away.

I think a couple of grand spend with the correct accountant may be the way forward.

Dunk

iTrader: (1)

Consider what evidence you would want to prove someone had been living in a house for a given period.
Utility bills to that address with the relevant name & showing useage. Council Tax bills, bank statements etc.
All very difficult to bullsh1t, unless you fancy joining Doddy & Piggot.

D

Wish

iTrader: (2)

surely you would have all the relevent bills if its been empty ??
Counicl tax, water and others ??


That will be enough to get them off your back

Dunk

iTrader: (1)

Notice the key word "useage".
So Mr Hail-Hail, I take it that the 1 unit of electricity that you've used in the last year ..............

Tax - You have to make money to pay it, don't be shy to pay your contribution.

D

[Edited by Dunk - 11/28/2003 1:35:25 PM]

hail-hail

All bills are sent my house address, and as I mentioned, I don't fancy telling big julie to pick the soap up himself.

image doctor

If you paid 40k in tax last year alone, I shouldn't think you would too much worry about this.

id

hail-hail

why, because I work hard for and earn good money, I should just throw it away, get a grip.

image doctor

id

P20SPD

iTrader: (1)

Look in my profile, and take my advise. Go see an accountant, not me, one near to you, that way you can speak to them face to face. It should be worth it, there is plenty of legitimate things you can do.

You can not ask for advice on this subject and expect a direct answer, without giving exact information, which i am sure you wont do on here, so go see an accountant.

Steven

Scooby96

AFAIK if you registered a Ltd company and then the co bought the house for £1 you could sell it via the new ltd co and get away with not paying any tax on the first £14k of profit

Tiggs

steven,

you have missed the point of SN. the idea is that someone post a sensible question...then 300 people talk rubbsih and offer advice that if you or i offered would have you jalied.

your role in this is to simply watch in horror not actualy tell them what to do

if you give real advice the "ahhh, my mate says its this and the bloke down the pub says that" people dont get a chance.

Tiggs

blair

If your earning £100K plus then definitely worthwhile getting tax advice - whether or not you decide to sell the flat

Best bet is to go on personal recommendation - I wouldn't have a clue about who to recommend in Hertfordshire

Have a look at the IR site for the details on how to calculate the worst case scenario and take it from there.

Scooby96

Tiggs - who exactly is that directed at?

Ok the Haydock comment was a joke but the ltd co idea isnt a bad one!

Diesel

Will be in the same boat too, and have asked the same question here. No chance of putting it in my daughters name as I hoped (well, not unless I die!). I'm gonna lose it in a card game to a Thai mate (LOL - can you PROVE that wouldnt work)

Every time I picked an accountant from the Yellow Pages it has been a bad idea and we ended up falling out...

If anyone could RECOMMEND a good accountant that would be something else... This is why I use Scoobynet to start the ball rolling on an issue - one gets ones sieve out and then uses what remains as background info and maybe gets a reccomendation.

Tiggs was most helpful once so dont jump down his throat cos he's seemingly out for his professions's invoiced business - they want to make money too Mine!!!!

Tiggs

lol- i'm sure every industry is the same. no doubt mechanics sometimes despair at the "tuning" tips on here.

T

ProperCharlie

deisel - i can give you the details of my accountant if you like - he is a straight up bloke, doesn't cost too much and doesn't make out that he is legally gonna save you 80% of the tax you pay

selling the house to a ltd co for £1 IMO would be liable to investigation: you are expected to carry out transactions at "arms length" and pay market value for goods.

trouble is the IR are not stupid. they spend 24/7 closing tax loopholes. if you don't want to go into the "grey" area of semi fraudulent practices, you basically have to cough up.

if there was some easy way to avoid tax, everyone would be doing it and the next day they would make a new law to make it illegal. already moves are afoot to reduce the advantage owner/managers obtain by paying themsleves a low salary and a high dividend.

all the above is AFAIK and may be totally wrong, but it is also more or less AFA people i have paid to know seem to know as well.

[Edited by ProperCharlie - 11/28/2003 8:19:55 PM]

Diesel

Thanks Charlie - kindly mail me as profile his/her details pls.

I'm doing it myself at the mo' but I'm thinking the only way to avoid CGT is to rent out the flat and let my daughter inherit it on my death. That's probably OK as the rent will be an income of £1200 or so per month by the time i've retired - INDEX LINKED!

That kinda makes sense - but would be good to know if I should pay off the capital on it, or just keep paying interest only and spend the capital repayment part on ME...

D