Property Tax Question

[Touronaut]

This is just a question and not an actual circumstance.

Lets say I buy 10 rental properties at £50K each. In 5 years time and with a hell of a bit of luck the houses are worth £100k each. I then decide to remortgage the properties on buy to lets at 80% LTV, which gives me a total of £300k. I sell my own home and add the £300k to the pot to buy a much more expensive personal residence. Another 5 years passes and the property market drops and the BTL's are now worth £50k each an I decide to sell at this point. Did I just earn £300k tax free?

 

[STDFR33]

No you're just saddled with a £300k mortgage and now have no rental income to service the mortgage.

 

[Touronaut]

No you're just saddled with a £300k mortgage and now have no rental income to service the mortgage.

LOL now there's a good point! What if the rent over 10 years has covered the £300K

 

[STDFR33]

Then you would have been taxed on the rental income.

 

[Touronaut]

Then you would have been taxed on the rental income.

I would have been taxed on the rental income anyway. What happens to the capital gains was more my question. I took the money while it was on the table but would have been taxed in the end when there was nothing there.

 

[STDFR33]

If you bought the properties for £500k and sold them for £500k, there is no gain.