Would this work to cut CGT on a BTL?
Discussion
For the usual reasons I'd be interested in offloading my BTL but I hate the idea of paying CGT.
It's worth £210,000 up from £70,000.
I have cash in the bank from another house sale that means I could pay all my salary into my pension for quite a while. I'd still be getting £720 a month from the BTL.
If I paid all my salary (for tax year 26/27 into my pension (and can I do that with the £720 as well?) could I sell my BTL during that tax year and I would be classed as having zero / minimal income?
Would that cut the CGT bill a lot, I'm a higher rate taxpayer?
Cheers
It's worth £210,000 up from £70,000.
I have cash in the bank from another house sale that means I could pay all my salary into my pension for quite a while. I'd still be getting £720 a month from the BTL.
If I paid all my salary (for tax year 26/27 into my pension (and can I do that with the £720 as well?) could I sell my BTL during that tax year and I would be classed as having zero / minimal income?
Would that cut the CGT bill a lot, I'm a higher rate taxpayer?
Cheers
alscar said:
CGT is treated separately to Income tax.
You could reduce the CGT by either having CG losses to offset or by investing freshly in potential tax relief schemes.
https://www.gov.uk/capital-gains-tax/ratesYou could reduce the CGT by either having CG losses to offset or by investing freshly in potential tax relief schemes.
If the OP can salary sacrifice his pension to be a lower rate taxpayer he will save won't he?
Tim330 said:
https://www.gov.uk/capital-gains-tax/rates
If the OP can salary sacrifice his pension to be a lower rate taxpayer he will save won't he?
Don’t know. He could transfer the asset free to his wife if applicable but she will then have the CGT tax to pay anyway so it only defers it. If the OP can salary sacrifice his pension to be a lower rate taxpayer he will save won't he?
Allowances are so small these days that even modest gains get hit quickly.
Tim330 said:
https://www.gov.uk/capital-gains-tax/rates
If the OP can salary sacrifice his pension to be a lower rate taxpayer he will save won't he?
Yes he will because he will pay more of the CGT at 18% and reduce the amount that is paid at 24%.If the OP can salary sacrifice his pension to be a lower rate taxpayer he will save won't he?
Assuming you are also calculating some transaction cost reliefs (Agency, Solicitor, Stamp Duty) and CapEX (improvements like extension, loft and etc, not routine maintenance)
What was your holding period ? would be interesting to see also your real return after inflation... (I wish the CGT would have inflation indexation)
What was your holding period ? would be interesting to see also your real return after inflation... (I wish the CGT would have inflation indexation)
Contrary to what has been said above, your other income (salary, rental income, interest, dividends etc) has a major impact on working out how much Capital Gains Tax (CGT) you will need to pay on a Capital Gain.
CGT is not a "stand alone" tax. Once you have calculated the chargeable gain on the disposal, the RATE of CGT you pay on that gain is determined by looking at your other income.
There are two tax bands of CGT for residential properties - 18% and 24%. How much of the gain falls into the 18% band and how much falls into the 24% depends on your other income.
Therefore, taking steps to reduce your "other income" may be very helpful in reducing the actual amount of CGT paid on the gain.
CGT is not a "stand alone" tax. Once you have calculated the chargeable gain on the disposal, the RATE of CGT you pay on that gain is determined by looking at your other income.
There are two tax bands of CGT for residential properties - 18% and 24%. How much of the gain falls into the 18% band and how much falls into the 24% depends on your other income.
Therefore, taking steps to reduce your "other income" may be very helpful in reducing the actual amount of CGT paid on the gain.
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