CGT reinvested

edkav

If profit from the sale of a letting property is put straight into another letting propertys mortgage, is is exempt from paying CGT? I know this can apply to a new asset, but I am unsure about existing ones and in this case the mortgage. Any help greatly appreciated thanks.
Edwina

DaveP

In short, no.

Unless perhaps it was an FHL.

edkav

Thanks Dave - I didnt think I was going to get a reply to that question!
Many thanks

T.C.

I have clients ask this question all the time!!!

edkav

He is argueing the point with me now! He says that before he sold he was told by his accountant that if he put some of the money into his other rental property, he would not be subject to CGT. Does the fact this property was in Scotland make any difference? I can't seem to convince him and he is making me doubt. Perhaps a call to HMRC would clarify things better! :huh:

peugeot

Is your client thinking he will get rollover relief on the capital gain. If he is, then I'm afraid he won't. As DaveP has said above unless it is a furnished holiday let, then rollover relief won't apply.

The reason is HMRC regard rental income as investment income, rather than trading income so the reliefs available on a rental business such as this won't apply.

Best regards
Steve

Bluewednesday

Don't you just hate having to tell a client that their previous accountant was not quite right!

DaveP

Actually, I love it!

Justifies my fee every time!

edkav

Thanks for the replies - I have to explain to him now! I can't believe his previous accountant - who was chartered - told him this!
Thanks again.:001_smile: