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Hi All,I am an accidental landlord with a single BTL property . I have jointly owned it with my wife since Nov 2010 (8.5 years) .I bought my current main residence in Sept 2016 . As I was not able to sell my previous residence, I was hit with the second home stamp duty surcharge of 8000 pounds. I have let it out to a nice family since I moved out of there.Now with the government's increasingly hostile BTL taxation policies , I am looking at whether I should continue letting out. I have worked out that I make around 4000 pounds a year after taxes (after 100% of interest relief taxed at 20%).If I sell it now , I will probably have a profit of around 90000 pounds after deduction of expenses and then be able to get a refund of my stamp duty surcharge of 8000 pounds. I will be eligible for PPR and Lettings Tax relief and be able to keep all of it.If I decide to keep letting out and sell it a couple of years later , what would be my CGT implications . I will not be eligible for Lettings Tax relief from Apr 2020. Also PPR extension will be slashed to 9 months. Will I be able to adjust my second home stamp duty surcharge against the CGT
If you can get the price you want I would say sell and take the profit and run
there will be nothing stopping you from buying investment properties again if you want to
best of luck
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
I am very loathe to ever sell a BTL property unless it is very badly performing.The market is currently very stagnated and you may not be able to sell, unless you discount the price.You should also consider, that, if you do not sell with tenants in situ, you could experience a significant void period.See - Benefits of selling a property with tenants So your first decision is to decide whether to sell with tenants in situ or sell with vacant possession.Perhaps speak to a local estate agent to get an insight into the sales market in your area?
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
I agree with DL, if you get the price you want for the property sell it - in any case the implications of the reduced PPR and lettings relief will probably negate the rental income for many years.
Also once you have sold it the money can either be used for your enjoyment or invested in ISAs to generate a tax-free return.
Remember Vanessa is a professional landlord which is why has commented in the way she has, not an accidental landlord.
Can the stamp duty surcharge that I paid while purchasing my new main residence be deducted from the Capital Gains while selling the BTL property
Check out HMRC's Capital Gains Tax calculator at the bottom of the web page at the bottom of this link: https://www.gov.uk/tax-sell-property/work-out-your-gain. The short answer (with the important caveat that at Vesta Property we don't provide financial or tax advice so please don't construe this as such!!) is that stamp duty is an allowable deduction.
As Vanessa says, it's a soft property market currently so you could always consider selling your BTL property with tenants in place. That way you'd preserve your rental income, you'd be less pressured to sell and can wait for the right price without losing your rent, plus the tenant gets to stay in their home. We've had a number of landlords approach us saying that they've previously been advised by their estate agent to evict their tenants and 9 months later still haven't sold their BTL property and have subsequently had to find new tenants!
At https://www.vestaproperty.com we specialise in helping landlords to buy & sell tenanted property. If that's of interest then please feel free to reach out!
Good luck and hope to hear from you!
Thanks for your replies. I had bought my first property paying no stamp duty (during the Stamp duty holiday). I stayed in it for 6.5 years and then bought my second property which is my main residence now. I paid an extra stamp duty surcharge of 8000 pounds when I purchased my second property. Can the surcharge be deducted when computing the capital gains for the sale of first property.The CGT calculator link does not provide any information about this