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When do you have to pay capital gains tax (CGT) on property?
When do you have to pay capital gains tax (CGT) on property?
If you own a property and considering selling it, you need to ask yourself a few questions,
- Do I have to pay capital gains tax when I sell my property?
- Do I have to pay capital gains tax only when I sell a rental or buy-to-let property?
- Do I have to pay capital gains tax on the property even if I never rented it out?
- When do I need to pay the property capital gains tax?
- What is the capital gains tax rate?
- Do you assist with the property capital gains tax calculation and return submission?
- Do I have to pay capital gains tax when I sell my property?
That depends, if there is a gain made on the sale of a property i.e. the selling price is higher than the cost of the property, then the gains will be subject to capital gains tax. Unless, the following apply:
- The property is your one home and you’ve lived in it as your main home for all the time you’ve owned it
- you have not let part of it out – this does not include having a lodger
- you have not used a part of your home exclusively for business purposes (using a room as a temporary or occasional office does not count as exclusive business use)
- the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
- you did not buy it just to make a gain
If all these apply you will automatically get a tax relief called Private Residence Relief and will have no tax to pay. If any of them apply, you may have some tax to pay.
What if I own more than one home?
In most cases, you only get relief for one home for any period. You must work out when you lived in each property as your main home.
- Do I have to pay capital gains tax only when I sell a rental or buy-to-let property?
No, any property will be subject to CGT unless it qualifies for relief.
Sometimes even your main house can be subject to CGT if you stopped living in it for a while.
- Do I have to pay capital gains tax on the property even if I never rented it out?
It doesn’t matter whether that house was not rented out during that period.
- When do I need to pay the property capital gains tax?
If you sold a property in the UK on or after 6 April 2020 you must report and pay any Capital Gains Tax due on UK residential property within:
- ays of selling the property if the completion date was on or after 27 October 2021
- What is the capital gains tax rate?
Please see the rates below and also note that the Capital Gains Tax rate you use depends on the total amount of your taxable income, so work that out first.
- 18% and 28% tax rates for individuals for residential property and carried interest
18% for the basic rate tax payer
28% for the higher rate tax payer
Annual exempt amount limits
You can use your annual exempt amount against the gains charged at the highest rates to reduce the amount of tax you owe.
| Tax year | Annual exempt amount for individuals, personal representatives and trustees for disabled people | Annual exempt amount for other trustees |
| 2023 to 2024 | £6,000 | £3,000 |
- Do you assist with the property capital gains tax calculation and return submission?
Quick answer: Yes. We have a very helpful site that make the whole process quick & easy via www.PropertyCapitalGainsTax.uk
Get in touch to find out how we can help you
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