Question:
If we sell one rental property and, after paying off the mortgage, use the balance to repay the loan on another rental property (which we will keep for the moment) would that balance be liable for capital gains tax (CGT) since it is reinvesting in the same business?
Arthur Weller replies:
Not just that balance, but the difference between the sale proceeds and what you paid for that property will all be liable to CGT. Even though you are reinvesting in the same business, unfortunately in this country there is no holdover/rollover or reinvestment relief for a capital gain on a residential investment property except for: (a) compulsory purchase; (b) furnished holiday lettings; or (c) under the enterprise investment scheme rules, which are not compatible with investment in residential property.
