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CGT on rental property

DanielDaniel Just JoinedRegistered Posts: 4
Hi, anybody knows how CGT works for some one who has got 2 houses,one is for his residential and other one is for his main source of income (rental property income) when he sales renting one and reinvest it on another property for rent or buying a shop?

Regards

Comments

  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    Hi,

    I didn't quite get the second part of your question, but he will be exempt from CGT on his main residence (principle private residence relief). He will owe income tax on his rental income, and can offset revenue expenses against this. When he sells the rental property, CGT will be due on any profit on sale, less any capital expenses incurred, and expenses relate to the sale.
  • JodieRJodieR Experienced Mentor Registered Posts: 1,002
    I think that the second part of your question is asking about rollover relief - it's years since I've had to think about it and I cannot remember whether it can be claimed on rental properties, but if it can then you can opt to not pay CGT on the gain and instead it would increase the eventual gain when you sell the new property.
  • T.C.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    I don't think this applies??!!!
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Monsoon wrote: »
    Hi,

    I didn't quite get the second part of your question, but he will be exempt from CGT on his main residence (principle private residence relief). He will owe income tax on his rental income, and can offset revenue expenses against this. When he sells the rental property, CGT will be due on any profit on sale, less any capital expenses incurred, and expenses relate to the sale.

    Unless he just happens to live in the rental one, make it his home, then sell it......
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    PGM wrote: »
    Unless he just happens to live in the rental one, make it his home, then sell it......

    Yep, depending on tyhe actual dates, moving into the rental property could mean some periods are exempt from CGT. But then, that shifts PPR onto the rental, meaning he loses it on the other property.

    Needs careful planning.

    I haven't a clue about rollover relief, definitely not one I keep in my head!
  • DanielDaniel Just Joined Registered Posts: 4
    JodieR wrote: »
    I think that the second part of your question is asking about rollover relief - it's years since I've had to think about it and I cannot remember whether it can be claimed on rental properties, but if it can then you can opt to not pay CGT on the gain and instead it would increase the eventual gain when you sell the new property.
    Thanks for your replies
    This case is for a couple who are planing to divorce, both houses are under husband name and husband lives in residential one (wife and kids rented somewhere else. Court ordered to sale the rental one and pay 55% of the gain after tax deducting to his wife. Since the rental flat is his only source of income , he is wandering he may be able to invest his 45% share of gain to by another rental home one or by some share of another business. An independent expert (requested by court) estimated CGT around £160,000
    , so husband seeking to get advice to save more on tax to be able to invest his part money on some thing else. I was thinking it may can be treated as Business Asset Rollover Relief but I am not sure. You Todier, TC, PGM may have better clue about if you know the full story.
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    I dont think Business Asset relief would apply as a sole rental property is not considered a business.

    There may be a possibility for him to defer the gain on the sale of the property. Holdover relief? I'm not fully up to speed on any of these reliefs.

    He really ought to take paid formal advice on this one.
  • DanielDaniel Just Joined Registered Posts: 4
    Monsoon wrote: »
    Yep, depending on tyhe actual dates, moving into the rental property could mean some periods are exempt from CGT. But then, that shifts PPR onto the rental, meaning he loses it on the other property.

    Needs careful planning.

    I haven't a clue about rollover relief, definitely not one I keep in my head!
    Thanks for your replies
    This case is for a couple who are planing to divorce, both houses are under husband name and husband lives in residential one (wife and kids rented somewhere else). Court ordered to sale the rental one and pay 55% of the gain after tax deduction to his wife. Since the rental house is his only source of income ,to be able to buy another rental home or buy some share of another business he is seeking for more save on tax if it is possible. An independent expert (requested by court) estimated CGT around £160,000
    , I was thinking it may be possible to postpone the tax by treating as a selling a business and apply for Business Asset Rollover Relief but I am not sure. any idea?
  • DanielDaniel Just Joined Registered Posts: 4
    thanks again
  • andrewtdkandrewtdk Well-Known Registered Posts: 150
    I dont think you can get rollover relief unless it is a furnished holiday let. Maybe look into relief by buying eis shares?

    I would advise your client to seek specialist advice to make sure they get any reliefs available.
  • BluewednesdayBluewednesday Font Of All Knowledge Registered Posts: 1,624
    As far as I am aware there are no rollover or holdover reliefs available in this case.
  • T.C.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    I am 99.9% sure that there are no roll-over type reliefs available for this type of transaction!
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