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Capital gains tax on property

Capital gains picture

What is it

When a non-inventory asset is sold for and profit is gained, a capital gains tax is charged. The most common source of capital gains is the sale of stocks, bonds, precious metals, and property.

Who’s eligible

 You may have to pay Capital Gains Tax (CGT) if you make a profit when you sell property that’s not your home, for example:

  • Buy-to-let properties
  • Business premises
  • Land
  • Inherited property

There are different rules if you:

  • Sell your home
  • Live abroad
  • Are a company registered outside of the United Kingdom

How to work out CGT

It is the gain on the property that is taxed, not the whole amount of money received. For example, if you bought a property for £200,000 and sold it for £300,000, you would only have to pay CGT on the £100,000 profit. Taxpayers in the primary rate pay 18% of the proceeds from the sale of the property, while those in the higher and additional rates pay 28%.

What is deductible

You only have to pay Capital Gains Tax on your overall gains above your tax-free allowance (called the Annual Exempt Amount).

The Capital Gains tax-free allowance is:

  • £12,300
  • £6,150 for trusts

You may also be able to reduce your tax bill by deducting losses or claiming reliefs – this depends on the asset.

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