How much CGT would we pay, if any?
We purchased a property in July 1999 for £67,500 and lived in the property as owner occupiers. We remortgaged in February 2003 for £180,000 as a buy-to-let and rented it out continuously to the present date. The current value of the property is approximately £220,000 (maximum). The property has always been in the joint names of myself and my wife. We wondered if the remortgage in 2003 has any bearing on capital gains tax (CGT)? Did we effectively 'buy the house again' for the purposes of letting it or is this just wishful thinking?
Arthur Weller replies:
The remortgage in 2003 has no bearing on the CGT position. The capital gain is the difference between £220,000 (or sale proceeds) and £67,500, less any principal private residence relief, lettings exemption (for both you and your wife) and annual exemption.
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