vito Posted February 9, 2015 Share Posted February 9, 2015 I m thinking to remortgage my first and only house in order to invest in a second propriety. My broker does it very simple in theory to remortgage the house, cash in some equity in order to use it as deposit for a second house..He (my broker) doesn t say much though about taxes I might need to pay on the equity i cash in..Do i need to pay taxes on my remortgage once i cash in the equity money???thanx Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/ Share on other sites More sharing options...
indiepanda Posted February 10, 2015 Share Posted February 10, 2015 Better off reading up on the HMRC web site to make sure (it's surprisingly clear for a government website) but if your first and only house is the one you live in, I don't think you should be liable for tax on any equity you release to invest in a new property - you aren't really selling it anyway, just increasing the loan against it.You would have to declare the income from renting out that second house to the taxman(think you can offset the mortgage interest against the rent as well as various other expenses) and if you sold that investment property you would be liable for capital gains tax (assuming it had gone up in value). https://www.gov.uk/tax-sell-property/what-you-pay-it-on Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-821953 Share on other sites More sharing options...
Loz Posted February 10, 2015 Share Posted February 10, 2015 There is no tax to be paid on releasing equity, be the house you primary residence or otherwise. You will need to pay stamp duty on the new house plus, as Indiepanda say, declare the rental income (plus keep tabs on all expenditure as you can claim against them).If you are worried, ask a tax advisor. I found Ray Coman at Coman & Co on Upland Road incredibly helpful. Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-821955 Share on other sites More sharing options...
AbDabs Posted February 10, 2015 Share Posted February 10, 2015 If you are not selling any part of your existing home you are not actually 'releasing equity'. You are simply using your house as collateral to raise a loan, which is by way of a mortgage. So there is no tax to pay. The tax only comes about when you earn some money, either by renting your new house, or by capital gain when you sell it.The tax problem you may want to investigate is whether you will be able to set any of the rental income against the mortgage interest, if the mortgage is on another property. Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-822062 Share on other sites More sharing options...
vito Posted February 12, 2015 Author Share Posted February 12, 2015 Thanx everybody...that calms me down..will check it anyway with accountant! Thanx:) Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-822842 Share on other sites More sharing options...
KidKruger Posted February 12, 2015 Share Posted February 12, 2015 Not if the equity is sourced from your main residence being remortgaged. Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-822975 Share on other sites More sharing options...
vito Posted February 12, 2015 Author Share Posted February 12, 2015 tataaa!!!!and...what do You mean by it KKruger? Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-822977 Share on other sites More sharing options...
KidKruger Posted February 12, 2015 Share Posted February 12, 2015 Vito you asked a question and I've answered it.Simples. Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-822980 Share on other sites More sharing options...
Loz Posted February 12, 2015 Share Posted February 12, 2015 The tax problem you may want to investigate is whether you will be able to set any of the rental income against the mortgage interest, if the mortgage is on another property.You can claim the interest on mortgages that are for properties that are let (or empty and available to let). So if you own three properties with mortgages, let two of them and live in one, you can claim on your tax the interest for the two let property mortgages only. This is why most people crank up BTL mortgages as high as possible and pay their primary residence mortgage down as far as possible.Income and costs are treated as one lump (i.e. not itemised per property), so you are taxed on [total of your rental income - total of your interest/expenses]. Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-823014 Share on other sites More sharing options...
Mick Mac Posted February 12, 2015 Share Posted February 12, 2015 Is AbDabs going to answer his/her own question? Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-823017 Share on other sites More sharing options...
AbDabs Posted February 13, 2015 Share Posted February 13, 2015 Loz did a great job answering - thanks. That's what I presumed, that you can claim for the interest on the mortgages for the let properties only, i.e. a re-mortgage on the existing house wouldn't comply. I don't have any buy to let properties so I couldn't speak with certainty. Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-823079 Share on other sites More sharing options...
Mick Mac Posted February 13, 2015 Share Posted February 13, 2015 It will comply. You can get interest relief on the loan secured on your main residence (re-mortgage) if used to help purchase a rental property. It doesn't have to be a loan on the let propertyhttp://www.accountingweb.co.uk/anyanswers/interest-purchase-second-home-tax-deductible-if-remortgage-main-residence Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-823102 Share on other sites More sharing options...
Loz Posted February 13, 2015 Share Posted February 13, 2015 You learn something every day. Thanks, Mick Mac Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-823138 Share on other sites More sharing options...
red devil Posted February 13, 2015 Share Posted February 13, 2015 I'd like to learn something new. Does anyone know if there is a way round the Capital Gains issue if you have a rental and want to sell it?For example, if you sold your main residence and then moved into the rental, thus becoming your new main residence, how long would you have to live in it to avoid CGT, or is this a no-no regardless?... Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-823214 Share on other sites More sharing options...
Loz Posted February 13, 2015 Share Posted February 13, 2015 CGT can be complicated, but basically...1) Work out home many months you will have owned it.2) Add up all the time it was your primary residence in months. Add on 18 months.then, work out the %age of liability you have for the time when it wasn't your primary residence. So if you've owned it 15 years (180 months) and it was you primary residence for 10.5 years (126 months, plus 18, so 144 months). So your CGT liability is (180-144)/180, so 20% of the gain.Then, work your capital gain (i.e. sell price - buy price). Lets say that is ?400k. Your CGT liability is 20% of that, so 80K. That is your taxable gain - you will pay tax on that at a rate depending on your income.But, there is also some sort of rental relief you can claim as well. You'd really should talk to a tax expert before you sell. Again, Coman & Co were really helpful. Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-823268 Share on other sites More sharing options...
red devil Posted February 14, 2015 Share Posted February 14, 2015 Thanks Loz... Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-823456 Share on other sites More sharing options...
Mick Mac Posted February 15, 2015 Share Posted February 15, 2015 Loz Wrote:-------------------------------------------------------> You learn something every day. Thanks, Mick MacMy pleasure Loz :) Link to comment https://www.eastdulwichforum.co.uk/topic/54297-advice-on-re-mortgage-and-tax-pls-help/#findComment-823465 Share on other sites More sharing options...
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