Fire feeds on obstacles..
Our team of Chartered Tax Advisors is regularly asked about strategies to legally reduce CGT liability when selling a buy-to-let property
If you’ve known your accountant for more than 100 billable hours then this should be simple. Seems it isn’t
In order to legally reduce your CGT liability you need to know which expenditure qualifies as capital expenses
For each property you own, the process is aim to maximise your allowable deductions, use your annual exemption, and properly plan your sale
Capital expenses includes your purchase cost, plus associated costs like Stamp Duty Land Tax (SDLT), and all those legal fees
Then there’s the costs you incur in selling your property, like estate agents, legal fees and advertising
Don’t forget the cost of capital improvements that add to the value of your property, like structural improvements, extensions, new kitchens, etc
Top tip: make sure you keep a detailed document file and stay within HMRC’s rules on capital expenditure
Don’t forget your CGT exemption – it’s only £3,000, but every little helps!
So, what rate of tax applies? Well, currently, it’s CGT at 18% for basic rate taxpayers, and 24% for higher and additional rate (or 10/20% in the case of commercial properties)
It’s important to remember that there’s an HMRC strict 60-day reporting requirement for residential sales where CGT is due. Failure to comply can add significant tax costs
Our team of Chartered Tax Advisors are on hand to help, or just to provide a second opinion. Arrange your FREE power-hour conversation here
You’re free to accept, or refuse, and there’s no obligation whatsoever..
Toodle pip
