If I realise equity via remorgage can I include this in my costs against CGT when I sell the investment property? And how long must I hold this second morgage to achieve this tax avoidance situation?
Remorgage on Investment property
Jan 11, 2004
4 Replies
Are you ignoring Ronald's comment to your other post?
What is the cost you want to include "against CGT"?
In message , Bedford landlord writes
No. Borrowing has no effect on CGT.
No I am not ignoring its just that google does not give an acknowledge of start of thread. Hence the resend. Cg=sale£-Buy£-assocaited costs, I think the loophole is to do with enhencement costs that get lost??! But it is worth far research in other areas. Thanks
What Peter is getting at is that it looked as though you may have seen my answer but didn't like it, so rephrased the question, asked it again, and hoped for a more pleasing answer.
That's not a loophole, it's proper above-board stuff. You are probably aware that if you spend money on repairs to the property, these are what are called "revenue" expenses and are set against rental income. They cannot be used to reduce the capital gain. But if you spend money on enhancements, you cannot set then against rent, but you can set them against gain.
So if you buy a property for £10k, and spend £20k tarting it up, and then sell for £60k, your gain would be £30k. This is a simplification, of course, since it ignores indexation and taper and any other reliefs you may be entitled to.
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