Q.1 What figure is used for calculating capital gains tax?
I have owned a property for 35 years and still have a mortgage on it. I initially paid £30,000 for the property, but around 25 years ago I remortgaged £60,000 to free up some capital. I started to rent out the property around 20 years ago. If I were to sell the house now (e.g., for £70,000), would the capital gains tax (CGT) be based on the initial purchase price, or would it be from the remortgage or outstanding balance?
Arthur Weller replies:
The CGT calculation is based on the initial purchase price. The mortgage is not relevant for CGT purposes.
What Figure is Used for Calculating Capital Gains Tax?
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