In terms of Capital Gains Tax, selling property can result in a substantial tax bill if it has increased in value since you first acquired it. This is because Capital Gains Tax is levied on any such increase, which is added to your taxable income for the year and then charged as if it were the top portion of the resulting sum. However, for Capital Gains Tax, selling property is also an area with many exemptions and reliefs that can, if the conditions are met, reduce the tax burden by a significant amount.
Some of the possible exemptions and reliefs include:
- Private residence relief for your main home. As long as it meets certain criteria, it may be completely exempt from Capital Gains Tax. However, if you are married or in a civil partnership then both you and your partner or spouse must nominate the same main residence for relief.
- The first £9,200 of capital gains each year is exempt from Capital Gains Tax.
- Taper relief reduces the payable tax on assets, including property, depending on the number of years you have held them for and whether they are business or non-business assets.
For more information Capital Gains Tax, check out our online Fair Investment Tax Bookshop, featuring software and guides such as:
Property Capital Gains Tax Calculator