Capital Gains Tax?

smalltimeplayer

Hello, just have a few question for all of you out there.
I've been doing a lot of reading but haven't really been able to get my head around CGT and namely what you have to pay when selling a house that was bought on a buy to let mortgage? If taxes have been paid on any income earnt then would I have to pay CGT after selling the house? And if taxes hadn't been paid on income earnt from the property how would that work? Do I only have to pay CGT if the property has increased in value?
Thank you for your time and advice.

silvercar

You pay income tax on the income you receive ie any profit you may make from the rental income less expenses. One often big expense is the interest on the mortgage payments.

Capital gains tax is the tax you pay on any gain you make when you sell. Basic calculation is selling costs less buying costs less costs of selling and buying (estate agent fees solicitors etc) less any capital improvements. This gives you the net gain. From that you can subtract your CGT allowance (£10,200 this year) if not used elsewhere. You then pay CGT at 18% on the remainder. Include it in the tax return and pay the tax by the end of January in the year following the end of the tax year.

smalltimeplayer

Thank you for your help