What tax would I pay on the sale of my house, when the mortgage has been paid for through my business?
I am self employed and use my home as the base of my business, therefore my mortgage is paid from this, if I sell my house what kind of tax would I need to pay? Answers related to England tax system only please.
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If you have been deducting the whole of the mortgage interest as a business expense you have ben saying, in effect, that it is not your residence but is business premises. When you sell business premises, the whole of the gain is taxable.
If you protest that only part was used for business, HMRC will probably say that you have been filing fraudulent tax returns.
Did you prepare and submit your own accounts or use an accountant? Check how much of the interest element was actually charged against tax and how much was charged to you. Even if the whole of the interest was charged, it does not prevent PPR exemption from being claimed, but there might be some income tax due on the overclaimed interest.
Good question – and this would be passed (at speed) to an Inspector (yeah yeah they aren’t called that any more). Past returns would be reviewed – I would suggest you phone in and ask to speak to a technician.