Question:
My wife and I have a commercial property portfolio which does not have any mortgages or borrowing, and which was inherited by me about 12 years ago. If we decided to dispose of some or all of the properties, would I be better off mortgaging the properties say up to 80% and taking this cash out (is it tax free?), and then using our CGT allowances to reduce the other 20% when we sell the property? If we held the mortgages for at least 12 months prior to sale would that satisfy HMRC?Arthur Weller Replies:
Capital gains tax is based on the difference between the acquisition cost of the property and the sale proceeds. The mortgage is not relevant. In your case the acquisition value of the property is the probate value of the properties when you inherited them about 12 years ago, which was their market value at the date of death. If you do decide to mortgage the properties, any cash you receive from the mortgage is tax free, because it is merely a loan.
Arthur Weller replies:
