Capital Gains Tax House Sale

publication date: Dec 29, 2010
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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Capital Gains Tax House Sale


In 2010 the Coalition government made changes to the Capital Gains Tax (CGT) that is applied to properties and depending on how much you earn and what tax bracket you are in you might pay anything between 18 and 28% Capital Gains Tax on a house or property sale.

For those people who pay 20% or less income tax, if you have a second or third property that you have never lived in, it is likely to be subject to Capital Gains Tax at 18%, although this will only apply to the amount of Capital Gains minus what you’ve spent on the property to improve it and your Capital Gains Tax Allowance. If you are paying 40% or more tax, then you are likely to pay 28%.

Most people who either just own one property or own several but have declared one of them as their main residence to the Inland Revenue within two years of moving in, don’t have to pay Capital Gains Tax when a property is sold.

You will have to pay some Capital Gains Tax if you lived in the property for a while, then moved out and rented it for some years. In some cases you will be exempt, but if you have not lived there for some time, you are likely to have to pay some Capital Gains Tax. Typically this is on CGT worth more than £40,000. It is important to talk to a property tax specialist that knows the latest tax rules and regulations – especially as the new Coalition government is changing the property tax rules and increased CGT within months of coming to power!

For more information about Capital Gains Tax on a Property Sale, see document HS283 ‘Private Residence Relief’ or Contact Us.

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