Selling your house or property attracts certain taxes and you need to be aware of these taxes so that you don’t suffer the consequences of not paying them. But what are these charges, how do they come about and when are you expected to pay them?
This article will explain all you need to know about the taxes you’re to pay when selling your home and any exemptions that may apply.
Property Taxes When Selling a House
What are the taxes you pay when selling your house? There are other taxes to pay when selling your house but you should focus mainly on Capital Gains Tax (CGT) and this too can be exempted.
What is Capital Gains Tax?
UK homeowners are obligated to pay Capital Gains Tax when they sell certain properties. You’ll be required to pay this tax especially if you made a profit from the sale of the property if the property has increased in value at the time of the sale.
Usually, you’re expected to pay CGT when you sell any property that’s not your main home; which means you need to have several other properties before you can pay this tax. And you have the option of choosing which of your property will be your main residence.
When Does CGT Apply?
You’ll only need to pay Capital Gains Taxes on the sale of a house or property that is not your main house. However, there are other situations in which you have to pay Capital Gain Taxes. These situations include:
- Land
- Overseas property (if you reside in the UK)
- Business premises
- A property with rooms, land, or outbuildings used exclusively for business purposes
- Inherited property
- Buy-to-lets
- The property won in a divorce settlement
If you’re selling your main residence and its grounds are measuring over 5,000 square meters then you may have to pay Capital Gain Taxes on it.
Also, there’s no specific rate for Capital Gains Tax; the financial gains you get from the sale of your property determine the rate of the Capital Gains Tax you’re to pay.
Other Taxes When Selling a House
There are other taxes you may be required to pay when selling the house for example you’ll have to pay Inheritance Tax (IHT) on a property you inherited from someone. However, this tax is usually paid off by the deceased estate. But if the house isn’t your main residence, then you will have to pay CGT when selling the property.
If you plan to buy a new property, you may be required to pay Stamp Duty Land Tax (SDLT). You may not have to pay SDLT if you’re a first-time buyer and the property isn’t more than £500,000.
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