Selling 2 houses same time.

wharfedale2007

Hi there, im writing for my mum, we live in the uk, we need to sell 2 houses, we were renting one of them but now we need to sell up,
my mum is single working, i live with her "her son" age 20,

shes worryed she was told, if she sells both. she will get taxed 40%!! just cause of selling both in same year, please could you give us some advice many thanks.

scottishblondie

She will have to pay capital gains tax on the sale of the rental property - this is not due to selling both in the same year, it's just the way it is when you sell a property that is not your main residence. The amount of tax is based on the gains made in the time you have owned the property, eg if you buy at £100k and sell at £125k, the gain is £25k. However, there is an exempt amount of £10k (I think), so tax is due on £15k. The CGT rate is 18%, so in this example the amount payable would be £2.7k.

This is a VERY simplistic example - there are other factors to consider in the calculations that I have not mentioned, but I wanted to reassure you that your mother isn't going to have to hand over 40% of what she sells the properties for!!

Read the information here as a guide to how CGT is applied, and this page to see how you work it out for properties.