That's what I thought it should have been otherwise lots of investors out there will do it to get free cash.

I'm not investor though. I just have to sell my house soon...

Thanks

It's all assessed using market values. Firstly, how can they get a property valued at £100K for just £50K? Is the vendor trying to avoid CGT themselves and doing a 'backhander'?

If he bought it for £50,000 then the CGT base assessment value would be based on this, no matter what a mortgage lender was prepared to lend based on the actual value of the property! It's designed to stop people selling things to each other at a low value and avoiding pay the CGT that should have been due. So, the gain would be £150K if sold for £200K.

Just make sure that the property is your primary residence for at least 6 months prior to selling and you can forget about CGT.

Are here any CGT experts out there that can shed some more light on the subject?

Thanks a lot SSAS Guru for your reply.

What I meant in my second paragraph is if the amount used for CGT based on the time that investor got buy-to-let mortgage, in this case is £100,000. Of course he will not get £100,000 mortgage but may be £75,000 which means he will get his £50,000 back plus £25,000 tax free.

Then if he sell it in next ten years for saying £200,000. Is he going to pay CGT based on £100,000 (BTL) or £50,000 (when he bought)?

Many thanks

Hi again, computer problems!

Right then, if he sells his house in 10 years time he will face a taxable gain of £50,000. Current CGT rates are 18% for basic rate taxpayers and 28% for higher rate taxpayers; these could have changed by the the time he sells.

However, a simple route is for your friend is to live in the house for at least 6 months prior to selling it; it will become his primary residence and there is no CGT to pay on any profit from your primary residence. My friend has a portfolio of around 20 buy to let houses, and used to renovate and sell several per year, and used this method very well. I even supsect that he never actually lived in the houses just got his post sent there and registered on the electoral roll (Please note that I'm not suggesting you do this as it is illegal).

I'm not sure what your point is in your second paragraph to be honest but you would not be able to get a 100% mortgage anyway and you would have to pay interest on your loan. Again, why not live in it for 6 months, give it a splah of paint and flog it for what you can and have no CGT liability on any profit?

Hope this helps?

Hi,

Hi,

My friend is going to be married very soon. He will move into the new house and decide to let his current house. He bought his house a few years ago for £100,000. Now the market price is around £80,000. If he lets this house now and in ten years time he sells it for £150,000. How much will he pay CGT? Someone told him that it will base on £80,000 instead of £100,000. Is it true?

Because of that information, I also have my own question. If the investor buys the house to let it out for 50% below market using cash (say £50,000). Then hold it for six months before he put it for buy-to-let mortgage at £100,000. He will get away with £50,000 cash tax free but we will have homeless one family for six months then.

Please can someone explain this for us.

Thanks
Digital-mate