Do you pay Capital Gains Tax when you sell your house?

If you feel the time has come to sell your house, there are many things you must consider. One of these crucial aspects is understanding whether you must pay Capital Gains Tax when the home is sold. There are many deciding factors as to whether this is applicable to you and this article hopes to answer any queries and clarify any confusion.

What is Capital Gains Tax?

Capital Gains Tax is a tax on the profit when you sell or “dispose of” something that has increased in value. If you pay basic rate Income Tax, the rate of Capital Gains Tax is 18% of the gains you make on residential property. However, if you pay higher rate income tax, this percentage rises to 28%. You are not taxed on the entirety of the money you receive, just the gain that you make.

“Disposing” of an asset can include, but is not limited to:

  • Selling it
  • Swapping for something else
  • Giving it away as a gift or transferring it to somebody else

Do I have to pay when selling my house?

According to the UK Government, you do not have to pay Capital Gains Tax when you sell or “dispose of” your home – providing all of the following apply:

  • It is your only home and you have lived in it as your main home for the duration of the time you have owned it
  • You have not used a part of the house exclusively for business purposes (using a room temporarily or occasionally as an office does not count)
  • You have let part of the house out (having one lodger is not included)
  • The grounds are less than 5,000 square metres in total
  • Making a gain was not the sole reason why you purchased the house (e.g., you are not a property developer)

If all of these apply, you are eligible automatically for tax relief known as Private Residence Relief and will not have to pay Capital Gains Tax when the property sells.

If only a few of the above are relevant, there may be some tax to pay. For example, HMRC may decide that the property cannot be considered your main residence, so it is always important that you double check and ask the advice of an impartial professional if you are unsure.

Why sell your house with Fast Cash 4 Houses?

At Fast Cash 4 Houses, ethics and speed of completion are our top priorities.

Our team have had many years of experience in evaluating and concluding property purchases.

Do not hesitate to contact us to discuss your home on 01204 294 356 or email the team at [email protected].

We look forward to hearing from you.

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