Do you have to pay tax when you remortgage a property? Property tax expert explains everything

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Remortgaging a property can feeling like a taxable event, you've got extra cash in the bank and naturally you feel like HMRC are coming for their slice.
The good news is that in almost all cases there is no need to pay any tax when you refinance a property because there hasn't been a taxable event. The property hasn't been sold or transferred, as a result no tax to pay.
A mortgage is a loan, and borrowing money from a bank would never be taxable, as a result the mortgage capital repayments are also not tax deductible. For most landlords you will be on an interest only mortgage, meaning you won't need to worry about splitting out what is capital and what is interest.

[@Jeffybonbon]

If your a personal investor you can remortgage and do whaat ever you want with the cash and spend it

[@RobertGillontheinterweb]

Stamp duty can be due on a remortgage but only when there’s a transfer of equity and the consideration (I.e. half the mortgage) is over £40k (if you own another property). For example, A owns BTL with £100k mortgage. A meets B, they get married, for tax reasons (income tax and future CGT) it would be a good idea to make B a joint owner but they have to be put on the mortgage. Although no money changes hands £50k of the mortgage is the consideration so £1,500 is due.

[@doncarlino5123]

if you remortgage through an incorporated property company then the company would have the money in its account so although no tax to pay its only of benefit to buy more property and liable for a hefty tax if used personally right? whereas same scenario but as sole trader you can use the money as you wish and no tax payable.......

[@RobertGillontheinterweb]

With regards BRRR you can get into a CGT trap if you leverage up too much after value increases

[@JoshuaTharby]

Yes you certainly can

[@doncarlino5123]

hey Robert , what is CGT trap ?

[@RobertGillontheinterweb]

@@doncarlino5123 if you own a property long enough and borrow against it enough then eventually the capital gains tax you’ll have to pay when you sell it could be more than you’ll receive from the proceeds of sale.

[@toffmcman9505]

Hi mate just quick question , I have remortgage a property recently and pulled out money so purchases price it 95k and after owning for 5 years it’s been valued at 170k I refinanced it and pulled 23k
So how CGT works , will be paying CGT on profit of 75k as property gone up on price or I’ll be taxed on current refinance which brought my mortgage up to 128k
Hope this make sense ?
Thanks