Tax on Selling a Property

If you want to sell a property that isn’t your main home then you may have to pay some tax on it. Our guide looks at when you do and do not have to pay tax when you sell a house or flat.

Selling your own home

You do not have to pay any tax when you sell your own home, providing:

  • The property was your only home whilst you owned it (ignoring the last three years of ownership)
  • You bought it primarily to use as your own home
  • You used it as your home during the time you owned it and used it only as a home for yourself, your family and up to one lodger
  • The garden/grounds do not exceed 5,000 square metres including the site of the house

If you are married or in a civil partnership (and not separated) you and your spouse or civil partner can have only one such main residence between you.

Selling a property that isn’t your main home

If you sell a property for more than you paid for it then you will normally have a ‘chargeable gain’ and you may have to pay tax.

However, in the 2011/12 tax year, the first £10,600 of your total taxable gains are tax free.

Factors that you should take into account when working out the tax payable include:

  • You can deduct some of the costs of buying, selling and improving the property when working out your ‘chargeable gain’ (profit)
  • You can transfer property to your spouse or civil partner without paying Capital Gains Tax (if you are living together)
  • Any loss made on the property could be offset against other chargeable gains you make

You should also bear in mind that if you give property or sell it cheaply to your children or to others, you may be liable to pay Capital Gains Tax.

What paperwork you should keep

HM Revenue & Customs (HMRC) recommends that you keep the following information/documents:

  • Copies of valuations to calculate gains/losses
  • Contracts for sale and purchase
  • Evidence of the costs of purchase, sale or improvements to the property

5 comments

  1. elaine says:

    I have owned a 2nd property for 14 years and I am now selling this how do I calculate capital gains is there a sliding scale rule for the time I have owned the property, and do I have a early allowance for this

    • TaxFix says:

      elaine: Generally speaking, the capital gain, is the amount that the property has gone up in value. There may be allowances, for example if it has ever been your primary residence that might apply.

  2. T Butler says:

    When my father died he left the house to my mother but she in turn transfered the ownership over to my brother & myself,my mother has now died & we intend to sell the property. Will there be any taxes to pay ?

  3. Tax Fix says:

    Roger – thanks for your question. Yes, that’s right as the ‘gain’ you made on the property is lower than the tax-free Capital Gains Tax allowance.

    However, if you made other capital gains in the same tax year then you may still be liable for tax.

  4. Roger says:

    So, if I bought a ‘buy to let’ property for £93,000 and sold it for £99,000, there would be no Capital Gains Tax to pay?

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