njkmrs

Anybody got any idea on how to avoid paying this ?
Want to sell a property that I have rented out for the last 4/5 years ,but dont want to get stung for tax .
Someone has suggested I move into it for a 6 month period to make it my own residence if you like ,in which case I would not then have to pay it .
Anybody know if this is the case or have any other advice .
Regards

MattW

What is this tax evasion day what with the VAT thread. First of all work out the tax, you only pay on the profit, less taper relief, less your allowance. Call HMIT and they will tell you.

Short and curlies is that there is no timescale for avoidence of CGT, you would still be liable for the 4/5 years even if you moved in for 20 years.

njkmrs

I was under the impression that if I were living in it so to speak ,it would be classed as my own residence and therefore no tax to pay .(after the 6 month period .)
Am i mis informed then .?

BigGT3Fan

Do you have any other property?

You aren't liable for CGT on your primary residence, but you are for any other places, so the answer is, it depends on whether you own another place.

njkmrs

I have a house with the family also ,but I would be seperating and moving into this rental property (cough ,cough ).If you know what I mean .

Hence making it my primary residence ,with a view to a reconcilliation perhaps 7 months or so down the line .

Rioja

Try the experts in the first instance to answer some basic questions;

HM Revenue & Customs: CGT/FS1 Capital Gains Tax - A Quick Guide

Longjing

The short answer is that you can try and scam the taxman if you like (eg by pretending you'd lived there longer than you have/did). Some people get away with it from what I hear. It is fraud though, so HMRC would take a dim view if it came out.

Only you know if it's worth it, but would you rob a bank for £20k? The consequences might not be all that different!

hail-hail

There are a number of ways that you can reduce the tax, I have just changed my 2nd property into a joint ownership with the wife. This essentially doubles the CGT allowance available when the property sells, there are loads of reliefs etc available, but best talking to Tax experts.

Buckwheat

You have to live in it as a primary residence for longer than 6 months to avoid CGT, it's 2 years IIRC.

Gymbal

What's Capital Gains Tax ?

But good luck with it anyway.

CharlesW

I would be very careful. The Inland Revenue are specifically targetting Buy to Let landlords at the moment.

See the other thread in this section and this from the DT.

Taxman warns landlords over buy-to-let bill | Uk News | News | Telegraph

r32

You've made a profit, pay the tax ............

njkmrs

Sounds a bit tricky trying to avoid it ,seems like a very complicated subject looking at the info I have read from your responses .
Thanks anyway .
Regards

Albert47

I was told by someone not too long ago that CGT was a self declared tax and the inland revenue dont have the resources to chase every land lord who does not declare it, therefor, only chase the land lords that make hundreds of thosands pounds profit.

not sure if it is true tho.

Adam

Longjing

It's true up to point I'd say. HMRC does not have the resources to check everyone's tax return, absolutely. I wouldn't bet that they only go for big boys - more random than that I think - but small sums ought to be less risky.

That said, with allowances and reliefs, the bill probably isn't as bad as it looks.

SPEN555

They could just employ one person to select totally at random people to investigate (and probably do) it's not a lot of resource but the threat of you being unfortunate enough to be investigated should be enough to ensure you declare what you need to and sleep easy at night.

Sauron

Also consider if/when caught you would not only pay the o/s tax but penalties, interest & surcharge HM Revenue & Customs: IR160: Enquiries Under Self Assessment

IR receives info from all sorts of places regarding ppty sales, interest, boat & plane ownership. The list of information powers seems endless.

StickyMicky

somebody from SN is bound to grass you up, so the idea is a no go IMO

Sauron

Remember there is a difference between avoiding paying tax and evading paying tax.
You can be sent down for the latter, as it is now a criminal offence.
And if you were going to try it, keep it quiet and don't tell anyone.

njkmrs

I have spoken to my accountant ,who has said they do pick at random,people to investigate thoroughly ,so she wont let me do anything to get me in trouble.(she certainly wont get involved in it anyway )Which basically means I will end up paying it .
The sums involved are not a fortune ,but its still a sickener to pay tax in my normal job and then get clobbered again after taking all the risks to fund a buy to let in the first place .
Still ,its been an experience .All parts of lifes rich Tapestry !!!
I am still thinking there must be a way round it that wont land me in the "Clink".!!
I really dont fancy having a couple of "Daddies " to take care of as part of a daily routine!!!!!!

Sonic'

Why is it such a sickener, yes I know we pay tax already, and now you are buying to let pure and simple to make a profit, so therefore you need to pay tax on that profit, just like you pay tax on what you earn

you should still make money, just not as much as you would like I guess

Wait till they start taxing ebay sellers, they already have dedicated teams researching ebay ready to start pouncing (or so I am led to believe)

Petem95

I have a mate who just moves into the place he rents for 6months, and this gets you around the CGT issue! Bit dodgy though really, and BTL looks like being the next big tax target (been a sitting duck for too long really!) so I would be a bit careful, and consider the risks...

Good move selling the place though - you are probably selling at the top of the market (maybe just past it) and must have made a fair whack having bought at a good time in the cycle to make a profit.

njkmrs

Yeh this is back to what I originally asked .Move into it and it becomes your primary residence hence no CGT to pay when you sell.I think it needs more investigation .

The Snug Rhino

dont be a moron - if you buy a house for £1m and rent it for 10 years while it grows to £10m do you think you can just live there 6 months and dodge a £9m gain?????

After 6 months it is your primary but that has no effect on the years you rented it.

You owe the tax your options are:

a) pay the tax

b) evade the tax

Simple

Rioja

Your accountant should be trying to off-set as much as possible against capital expenditure and loss to reduce your liability. If the house is jointly owned then you CGT liability is halved (each owner has a full allowance). If yhey're not doing this then get another accountant!

njkmrs

Thanks for that Simple

fast bloke

Keep it until you die and you wont have to pay CGT on it - Sorted

njkmrs

I had every intention of keeping it for 15 years or so,but I have a couple of others which I will hang on to as planned .
I just need to release some cash at the moment,for some work on my house and also I am itching to get back in a decent car .I sold my WR1 last year also to spend on the house,but my hunger for a fast car has not gone away.
I want to live for today and enjoy my life on the way through,rather than scrimp and save and croak it at 60,without chance to spend it.
Thats my thoughts anyway.

I would have thought my wife would still cop for it(CGT ) if I d died anyway.They are in joint names .

fast bloke

Your estate might have to pay IHT, but that wasn't the question......

urban

iTrader: (1)

OK I have a question along the same lines.

I inherited a 50% share of a house a couple of years ago with my Brother.
He lives in the house, I have my own place.

If it was partially remortgaged for 30K (15K each) is that liable for tax on some shape or form?

Thanks,

Shaun