Trading up - Capital Gains Tax

I

infopls

Guest
I wish to trade up to a 3bed semi from a 1 bed apartment.
I own no other properties apart from the 1 bed apartment. At the moment the rent is covering the mortgage but i have only rented it less than a year. While I have had it rented I moved back with my parents. I want to sell this apartment and buy a 3 bed semi nearer my parents.
What I want to know is how will I be affected by capital gains tax?
 
Since it's not your PPR, you will have to pay CGT. Also, if you bought as a FTB but did not live in the property for 5 years or more there maybe a clawback due.
 
how do mean a clawback? i have the apartment just over 2 years. Also I bought it as a first time buyer
 
clawback of stamp duty - assuming you were didn't pay any in the first place
 
All the information you need about the clawback is supplied here:
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A clawback arises if rent is obtained from the letting of the house or apartment within a period of 5 years from the date of the conveyance or transfer, other than under the rent-a-room scheme. The clawback amounts to the difference between the higher stamp duty rates and the duty paid and it becomes payable on the date that rent is first received from the property. A clawback will not arise where the property is sold to an unrelated third party during the 5-year period.
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right so - I have to pay capital gains tax of 20% upon selling the apartment.
How does stamp duty clawback affect me? Would I be right in saying it doesnt if I paid no stamp duty to begin with?
 
Hi Infopls, you didn't pay stamp duty as you bought the apartment as your PPR. You then used it an an invetment property, which means that you now owe the stamp duty which you should have paid, if buying the apartment as an investor.
 
infopls said:
How does stamp duty clawback affect me? Would I be right in saying it doesnt if I paid no stamp duty to begin with?
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No, unfortunately that's not how it works.

Basically, because you are no longer the owner-occupier of the property, you are considered to be an investor. You will have to pay whatever stamp duty an investor would have had to pay when the property was originally bought. The amount will depend on the original price of the property and the date of when it was bought.

Note, that the clawback should have been paid when you started to rent the property. You should resolve this ASAP to prevent yourself getting hit with large penalities and interest further down the line.
 
So now I owe money???!!!!

And then have to pay capital gains tax ? Is it 20%

If I hadnt gone on this website I never would have known this - how would I have been informed? And Your saying if I dont pay ASAP I will get hit with penalties? But I may never have known that I was liable for this!
 
infopls said:
So now I owe money???!!!!
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Sorry to be the bearer of bad news, but it appears so.

What price did you originally pay for the apartment? You need to see what stamp duty an investor would have paid on that price at the time you bought.

infopls said:
And then have to pay capital gains tax ? Is it 20%!
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Yes it's 20% of the gain, but you only pay this after you sell.

infopls said:
If I hadnt gone on this website I never would have known this - how would I have been informed? And Your saying if I dont pay ASAP I will get hit with penalties? But I may never have known that I was liable for this!
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The flipside of a self-assessment tax system is that you need to know your own liabilities yourself. To say you never knew to the Revenue is no excuse.

I'm not saying you WILL get hit with penalties but until you've sorted it out you certainly leave yourself liable to it. It's better to set things straight now rather than get a call 5 or more years down the line when the interest and penalties have mounted up.
 
If the apartment was your Principal Private Residence (PPR) for the first year you owned it, and you sell it within 12 months of you moving out, then there will NOT be any CGT.

The PPR relief provisions always give you the last 12 months as deemed residence, whether you were living there or not (provided it was your PPR at some point).

However, the stamp duty clawback issue still applies.
 
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