Renting UK property

**winkle100** · 27-05-2012, 07:11 AM

Smart arse!

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**winkle100** · 27-05-2012, 07:15 AM

The games up! I caught myself out DOH!

**Freckleface** · 27-05-2012, 07:18 AM

Originally Posted by winkle100

The games up! I caught myself out DOH!

Actually I think that says a lot about your general level of honesty - you are clearly not used to telling porkies and that's a good thing.

**Ken** · 27-05-2012, 10:00 PM

Originally Posted by winkle100

So really it's best just to go interest only and stick the profit each month in the bank.

This way the return will be the same as if i were to pay the mortgage off but I pay less capital gains because I only paid interest?

I have £100.000 equity in it and I intend on selling it in the next few years anyway.

Apologies finances were never my strong point!

The capital gain is the difference between what you paid for the property and what you sold it for. The mortgage is not part of the equation. The tax on the capital gain is identical regardless of whether you had a mortgage to buy the property or not and regardless of how much of the mortgage you paid off. Unless you can get more interest on your bank deposit than you are paying on your mortgage you'd be wisest to pay down the mortgage rather than leaving it in the bank (does of course also depend on whether or not you need access to the money in the future).

**bensym** · 27-05-2012, 11:48 PM

If you have lived in the property (before renting it) as your principle place of residence, you get tax relief on CGT. Definitely in Australia, but not sure under British tax law.

**Ken** · 28-05-2012, 11:23 AM

Originally Posted by bensym

If you have lived in the property (before renting it) as your principle place of residence, you get tax relief on CGT. Definitely in Australia, but not sure under British tax law.

There's no UK CGT to pay on the gain that occurred while the property was your "principal private property" however once it ceased to be (because you took up residence elsewhere) then the gain is taxable. I recall there is a time period after you cease to live there that you can sell it within and still not have to pay any CGT (unfortunately I can't remember how long that is) but if you don't sell within that window the gain runs from when you ceased to be resident.

**winkle100** · 28-05-2012, 11:53 AM

I believe my accountant said it to be 3 years- don't hold me to that though..

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**Heather Law** · 28-05-2012, 12:37 PM

Originally Posted by Ken

The capital gain is the difference between what you paid for the property and what you sold it for. The mortgage is not part of the equation. The tax on the capital gain is identical regardless of whether you had a mortgage to buy the property or not and regardless of how much of the mortgage you paid off. Unless you can get more interest on your bank deposit than you are paying on your mortgage you'd be wisest to pay down the mortgage rather than leaving it in the bank (does of course also depend on whether or not you need access to the money in the future).

If you sell your house for less than you paid for it would you still pay CGT?

**Ken** · 28-05-2012, 01:38 PM

Originally Posted by Heather Law

If you sell your house for less than you paid for it would you still pay CGT?

No, you only pay tax on the Gain (hence the G in CGT).

**winkle100** · 06-06-2012, 09:00 AM

Its been calculated roughly I'm going to owe 11k in capital gains- great!

Silly question but would I pay less CG if I opted to pay it in Australia or the UK or is it same where ever you are?

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