When selling a property that hasn't always been your main residence, you need to be aware of Capital Gains Tax.
This is a tax you pay on the 'gains' made from the sale of said property and is important to take into consideration as it can affect your overall profits.
How to Work it Out
Your 'gain' is usually calculated by the amount you sold your property for, minus how much you bought the property for.
If the 'gain' is more than your annual tax exemption, you will be required to pay Capital Gains Tax at either 18% or 28% depending on your tax bracket.
Using the Market Value
There are occasions where you should use the market value of your second property to work out your 'gains.'
You should use the market values if the property was gifted by you, if you sold it for less than it was worth, if you inherited it or if you owned the property before 31 March 1982.
If you think you could use the market value to work out your gains, don't hesitate to get in contact with one of our offices and we can assist you.
There are other rules for certain situations.
For example, if you jointly own a property, you will only need to work out the 'gains' for your share.
There are other rules if you live abroad, sell a lease, or are selling the property of someone who passed away.
Reporting the gain to HMRC
When you make a capital gain on UK residential property which results in a tax liability, the gain must be reported to HMRC within 60 days of completion, and the tax must be paid by the same deadline.
Need a Hand?
If you're looking to sell a property and want support in working out your 'gains,' please don't hesitate to get in contact with us.