Selling Your Property: Is It Subjected to Capital Gains Tax?

A property that has gained value since you initially acquired it is subject to capital gain tax if you sell or “dispose” of it for a profit. Please keep in mind that you will only be taxed on the profit or gain achieved on the transaction, not on the whole value of the transaction. This taxable gain will be added to your expected income to determine the amount of tax due.


Basics of Capital Gains Tax

When to Pay?

If it’s a second house or a buy-to-let property, or if you have rented out a portion of your principal dwelling, you will almost certainly be taxed on the sale. CGT is also imposed on the sale of commercial property, land, and inherited property. When determining your gain, you may subtract some expenses, including legal and estate agency fees, stamp duty, and surveying charges. Copping Joyce surveyors provide comprehensive valuation reports if you want to know if you are liable for Capital Gains Tax.


Private Residence Relief

When you sell a property you have lived in as your primary residence for the whole time you have owned it, PRR will exclude the gain from CGT. To be eligible for the relief, you must fulfill this and all other PRR requirements.

Second Homeowners

After deducting any permissible expenditures and allowances, those selling a second home or buy-to-let property must pay CGT on any profit they generate from the sale. The taxable gain is classified as the “top slice” of your income, and basic rate taxpayers will pay an 18 percent tax, while higher and extra rate taxpayers would pay a 28 percent tax.

Multiple Residence

What constitutes a primary residence is a knotty matter under tax law, but to put it simply, it is your house. Of course, home is much more than just where you live, and in most cases, it will be rather straightforward to locate. You may choose which one to use as your primary, tax-free residence if you own several homes. This does not need to be the one you live in all of the time or even the majority of the time.


You may want to choose the property where you anticipate earning the greatest money when you sell it. You have two years from the day you acquire a second home to designate it as your primary, tax-free dwelling. It’s worth noting that you are only allowed to nominate one property between you if you are married or in a civil partnership.


Things to Do

You must file a CGT return with HMRC and pay the tax within 30 days of completion. If you fail to record or pay tax when you are supposed to, HMRC will levy fines and interest.

With such a short timeframe, you will need to plan to guarantee that you meet the new 30-day deadline. Unless you fall into one of the categories for which the use of digital technology is not reasonable, you must submit your CGT return and payment online using HMRC’s government portal.


Related: Commercial Property Valuation for Probate



Depending on your tax bracket, you will owe capital gains tax (CGT) at a rate of 18 percent, 28 percent, or a mix of both. As is common when filing a tax return, you must provide information about the return’s disposition with your submission. In accordance with standard practice, you will be responsible for making any required tax adjustments via self-assessment.