Tax Advice

RedBoots_2

Thinking about selling a flat which I've been renting out but have been told there might be significant tax implications. Can anyone provide any more information?

Ian_W

Hi RedBoots,
When you sell your home, generally speaking, it's exempt from Capital Gains Tax. When you sell a property that isn't your home then it isn't exempt and you're liable to pay CGT on the gain you made - usually the difference between what you paid for it and what you sell for.

There are a number of reliefs that might be available to minimise the tax payable, the most common is taper relief which allows you to discount some of the gain on a sliding scale depending how long you've owned the property. In addition you have a personal allowance of £8.5K [this tax year, will be more next] against CGT, if the property is jointly owned the allowance applies to each owner but if you've other capital gains in the same tax year the allowance is per year not per gain. CGT is paid at the same rate you normally pay tax by adding it to your earnings so if you're a 40% tax payer it's at that rate, if you're on 22% a gain could move you into the higher band.

It's quite a complex tax, so before you sell it might be a good idea to get some professional advice from an accountant who may be able to advise how to minimise your liabilty further.

HTH.

RedBoots_2

Thanks, very helpful.