I am selling my buy-to-let property and plan to give the proceeds to my daughter and her husband. They need the money to top up their first-time buyer’s mortgage to get on the property ladder.
Will I have to pay capital gains tax (CGT) even though I am not making any gain myself?
First, you need to consider whether there is any CGT payable on the sale of your buy- to-let property.
To calculate CGT, you should deduct all the relevant costs from the sale proceeds, except the outstanding mortgage. You may have additional capital expenditure, such as a loft conversion or conservatory, and these can be deducted as well.
Further relief might be available if the property was your main residence at any point during your ownership.
However, in the eyes of the taxman you are still making a gain on the property if there is any profit after all these deductions and you will need to pay CGT on it. Like our reader on page 32, you will find the first £12,300 of the gain will be tax-free in the 2020-21 tax year, and the balance will be taxable at 18% if you are a basic-rate taxpayer or 28% for additional- or higher-rate taxpayer.
Mark Pattenden is a partner in the tax team at Haysmacintre.
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