You may have to pay capital gains tax if you make a profit (gain) when you sell or dispose of a property. Capital gains tax can be complicated, with so many exemptions and reliefs available. In case of sale of property, the reliefs applicable may be Principle Residence Relief (PPR), Letting Relief, Rollover Relief and Gift relief etc. which can significantly reduce the capital gains tax payable.

Selling your main home

If you are selling a property that is your main home and you always lived in that property as your main residence, generally you won’t be liable to make any tax payments if certain other conditions are satisfied.

However, if your property was used as man residence for the part of the ownership period and was vacant or let for other part of the ownership period, you may be liable to pay liable to pay capital gains tax. There are specials rules to calculate capital gains considering the following:

  • Periods of actual occupation
  • Period of deemed occupation as per HMRC rules
  • Periods when the property was let
  • Periods when the property was vacant

This requires detailed analysis of the individual case to calculate the reliefs such as Principal Private Residence Relief (PPR) and letting relief. This will in many cases either significantly reduce your capital gains tax or even eliminate it completely.

Sale of property that is not your main residence

You may have to pay tax if you sell a property that is not your main home, for example, buy-to-let property, business premises, inherited property etc.

How to calculate capital gain on the property?

Generally, your capital gain is the difference between what you paid for your property and the amount you got when you sold it.

You can also deduct the following costs from you gain:

  • Cost of buying e.g. estate agents’ and solicitors’ fees
  • Cost of selling e.g. estate agents’ and solicitors’ fees
  • Cost of improvement works, for example for an extension

If you have recently sold your residential or business property and would like us to help you in relation this, please get in touch.