| capital gains tax [message #387289] |
Mi, 17 Mai 2006 09:39 |
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I recently sold a property which i bought as a buy to let. i made
approx =A311000 profit which i haven't declared to the tax man as yet,
but fully intend to. Can you tell me if there is any tax deductions
such as mortgage redemption penelties, solicitors fees, estate agent
fees, which i can use to reduce the amount of tax i pay? Can you tell
me if i would get fined for not declaring tax for the last 4 years and
how much might it cost me? I would appreciate your help.
Fred
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| Re: capital gains tax [message #390148 ] |
Mi, 17 Mai 2006 11:54 |
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fred wrote:
> I recently sold a property which i bought as a buy to let. i made
> approx £11000 profit which i haven't declared to the tax man as yet,
> but fully intend to. Can you tell me if there is any tax deductions
> such as mortgage redemption penelties, solicitors fees, estate agent
> fees, which i can use to reduce the amount of tax i pay?
Yes. Start with the sale proceeds. Subtract the selling expenses
which will be estate agent's and solicitor's fees, but not mortgage
redemption charges (they go in the revenue account). This gives you
the net sale proceeds. From this, deduct the buying price and also
the buying expenses (surveyor fees, solicitor fees, but nothing related
to the mortgage). That gives you the "profit" (actually gain). Bet it's
already a fair bit lower than £11k.
Then deduct taper relief and perhaps indexation allowance, which will
depend on when you bought and when you sold. If you owned it for 4 years
indexation doesn't apply (abolished in 1998). If you owned it for just
over 4 years deduct 10% from the gain, if just under then only 5%.
Finally deduct the CGT annual exemption. You say you sold "recently"
which probably means during the 2005/06 tax year, which means the first
£8500 are exempt, and only the rest is taxable. Chances are there is no
rest.
> Can you tell
> me if i would get fined for not declaring tax for the last 4 years and
> how much might it cost me?
Almost certainly. Usually the lower of £100 and the tax due each year,
plus the tax due, plus interest. There might be extra penalties for
being very late. But if the tax due was trivially low (say, because
your expenses (chiefly mortgage interest, insurance, repairs, not
forgetting Wear&Tear allowance if furnished, which is worth 10% of the
rental income) were so high that only a very small amount of operating
profit remained), then you might get off with only a token fine.
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| Re: capital gains tax [message #390154 ] |
Mi, 17 Mai 2006 13:32 |
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thankyou ronald that was a great help. i will be able to sleep better
now.
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| Re: capital gains tax [message #390380 ] |
Di, 23 Mai 2006 09:32 |
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On 17 May 2006 04:32:00 -0700, "fred" <headland.simon [at] googlemail.com>
wrote:
>thankyou ronald that was a great help. i will be able to sleep better
>now.
You'll sleep even better after you send off revised tax returns!
--
Peter Saxton from London
peter [at] petersaxton.co.uk
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