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If We Sell at a Loss, Will We Still Have to Pay CGT?

Question
We are looking to move and are considering a buy-to-let scheme on our house in order to rent this property out.  We purchased the property at £250K and it is currently valued at £230K.  If we rent the property out for a year or two and then sell at £230K, will we still have to pay CGT even though the sale was at loss to the original purchase price?

Arthur Weller Replies:
If you look on HMRC website Capital Gains Manual at page CG14200  (www.hmrc.gov.uk/manuals/cgmanual/cg14200.htm) you can see that the capital gains computation is simply the disposal proceeds less the original expenditure. In your case this results in a negative £20,000 figure so you will have no CGT to pay. You have a capital loss that you can offset against any capital gains made this year or in future years. Also see page CG15810 (www.hmrc.gov.uk/manuals/cgmanual/cg15810.htm)

Property Tax Insider This sample question and answer is taken from Property Tax Insider, a monthly UK tax saving magazine for landlords and property investors.

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