tax question

[Mark23jordan]

Hi everyone,

If I was to sell a house for a £30,000 profit, would I have to pay tax on the full £30k, even though £10k was spent on the actual rennovation/expenses?



Sounds like a stupid question, but the aim was to actually move into this house but seeing how much value I've added to it I'm tempted to take the money and simply put a larger deposit down on another house!

thanks for your help.

Mark

[swordpoker]

You pay tax on £20K. Capital gains tax is 18% just now if you make less than £35K profit.

P.S. I'm no expert but have just started in property development and have done the tax research for myself.

[jackie]

get some advice too as it also depends if you have ever lived there and what year you bought it
Jackie

[IFA]

Don't forget you also have the benefit of your personal tax allowance for capital gains which can be offset against the profit (each person has a tax free annual allowance just the same as with income tax) and if the property is joint you can use both person's allowances.

If it's your only property though, you may not have to pay CGT at all as it may be classed as your main residence, any profit on which is generally non-taxable.

Speak to a local tax expert, they will help you through the legislation so that you keep on the right side of the law but maximise your profits. It will be well worth the fee.