Tax

[Barewolf]

Hi

Wondered if someone could settle an arguement, and give some advice

My Father and myself are confused over TAX, Basically its property sale tax. Its very confusing.

If I bought a property at 90,000, and spent 10,000 on renovation, and sold the property for 120,000. I would make a profit of 20,000.

What tax would i be accountable for?

using your example and assuming the property is not your main home then you would be liable to capital gains tax if profits on the sale are above £10,600

[Barewolf]

Originally Posted by martyh

using your example and assuming the property is not your main home then you would be liable to capital gains tax if profits on the sale are above £10,600

it wouldnt be a main home, it would be a development using cash from the bank (Not A Loan)

I assumed capital gains tax only applied to "Over" 125000

Originally Posted by Barewolf

it wouldnt be a main home, it would be a development using cash from the bank (Not A Loan)

I assumed capital gains tax only applied to "Over" 125000

Capital Gains Tax is a tax on the profit or gain you make when you sell or ‘dispose of’ an asset.
You usually dispose of an asset when you cease to own it - for example if you:

• sell it
• give it away as a gift
• transfer it to someone else
• exchange it for something else
• receive compensation for it - for example you receive an insurance payout when an asset has been destroyed

It's the gain you make - not the amount of money you receive for the asset - that's taxed.

You have an annual tax-free allowance for Capital Gains Tax known as the 'Annual Exempt Amount'.
The Annual Exempt Amount for the tax years 2011-12 and 2012-13 is:

• £10,600 for each individual
• £5,300 for most trustees

http://www.hmrc.gov.uk/cgt/intro/basics.htm

a bit of light reading for you