Rollover ?

[Roque]

Hello Everybody,

I'm new here, hopefully in due course I can become a valuable contributor to the forum (what a great forum this looks to be!), but for now I unfortunately have a couple of questions I wonder whether you can help with.

I'm a private landlord with NO limited company status.

I own a property which was purchased back in 1980 and has been on rent since - I would like to sell this property and purchase a larger one to keep on renting (just moving it more upmarket).

Will I be liable to capital gains tax in this situation or do I get some form of "rollover relief"?

If I am liable, is there any other course of action I could follow to achieve the same goal but with less of a tax bill ?

Thanks in anticipation :)

[TaxationPete]

There will be a CGT liability. There is no roll over relief on private residential rental property. Regards Peter

[Telometer]

Are you married? How much is the gain?

[Roque]

Thanks Peter.

As regards to the other information, I've been married throughout the period of rental property ownership and purchased the property for £12k and it was recently valued at £120k, so guess rough ad ready around £100k gain taking into account cost and purchase price (I did have a mortgage for about 10 years on the property but never kept a record of interest paid).

So what am I looking at capital gain tax wise? :(

[Telometer]

Steady on. Have you been paying income tax on the rental profits?

[Phlash]

It is sounding that way isn't it Telometer!

[TaxationPete]

Teleometer is asking if you are married, it is not a proposal, but if your wife was a joint owner of the property or you can transfer a share to her prior to any contract of sale, then you will double your CG Allowance of £10,000 each.
Did you report your rental income to HMRC. I ask this because you mention you did not keep records of the mortgage interest which was a deductible expense against the gross rental income. Regards Peter

[Roque]

Lol, sorry I thought about duration of marriage might have a bearing on the cap gain allowance received - an empty hope really, thought it would default to one year only :(

Yes I have been paying income tax on rental income throughout the period - but haven't kept my tax records beyond the last 10 years (the mortgage was paid relatively quickly) - so my last records started from the year 2000 whereas my mortgage finished in 1990 (after house purchase in 1980).

Is there any kind of inflation adjustment I'm allowed to use as it doesn't feel fair that I'm not calculating gains in real terms?

[TaxationPete]

Is your wife a joint owner of the property. ??? Regards Peter

[Roque]

Yes joint owner and we both filed returns for the rental income.

[TaxationPete]

So you have two sets of CGA. Have you been reporting the rental income 50/50, not that it effect your CGT position. You need to establish the value of the property on the 31st March 1982 and deduct that from the value value then deduct the costs of acquisition and disposal, then deduct your CGA £10,100 each and then divide by two and add it to you PAYE/normal income for this FY and tax it at 18% or 28% depending on your marginal rate. If you have not sold it yet then depending on your individual tax position it may be advantageous to transfer a larger beneficial share to your wife prior to any sales contract. Regards Peter

[Roque]

Thanks for that very informative response Pete - I think I've now got a good handle on it.

Appreciate all your help :)

PS If you ever have a question relating to a performance car maybe I can return the favour !

[Telometer]

You now see why many rental businesses refinance currently owned properties in order to raise cash for buying new ventures, rather than selling the ones they already have.