Tax On Selling Property- Do You Have To Pay Any?

Selling your main residential home

If you’re selling a property that is your main home, you won’t be liable to pay tax on the money you receive from it, even if you come out the other end with a handsome profit. However, there are certain conditions that must be complied with in order to make the cut:

• You personally purchased it.
• Any expenditure made on the property was primarily for the use of the home rather than with a view to make a profit.
• the property was your only home throughout the period you owned it (ignoring the last three years of ownership)
• you did actually use it as your home all the time that you owned it and, throughout that period, you did not use it for any purpose other than as a home for yourself, your family and no more than one lodger
• the garden and area of grounds sold with it does not exceed 5,000 square metres (about one and a quarter acres) including the site of the house

Tax on property that’s not your main home (i.e. BTL/rental property)

Anyone involved with property as a profession will inevitably feel the wrath of the taxman in one way or another.

Any profits made from selling a property that is not your main residential home will be considered as “income”, and therefore subject to Capital Gains Tax (CGT).

Similarly to other forms of tax, the amount of CGT you pay depends on your overall income and the tax bracket you fall into. At the end of the tax year, any gains accumulated from investment property should be added to your taxable income.

For up to date tax rates, go to the HM Revenue & Customs website.

Although, while tax is inescapable, there are ways to significantly reduce your tax liability. I’m no expert, and the area of property taxation can be a highly specialised one, so if you want to maximise profits, you should seek professional advice. I’m sure the experts know all kinds of tricks and loopholes that you can get your fingers dirty with.