Capital gains tax is what you pay when you sell something for more than the original price you paid for it. Capital gains tax is usually due when you sell something and make a profit on it.
The tax is due on the ‘gain’, which is the difference between what you paid for something and what you sell it for. Landlords may be liable for capital gains tax if they sell a rental property and make a profit on it.
Homeowners don’t pay capital gains tax on the sale of their main residence, but if that property has previously been let out, they may be liable for some capital gains tax. If you sell a property that is your main residence and it hasn’t been used for business or been rented out to a tenant, you won’t pay capital gains tax on any profit from its sale. However, if you’re a landlord selling a rental property, you may be liable for capital gains tax.
Costs you can deduct from your capital gains tax bill include:• Your annual capital gains tax allowance (if not used already)• Estate agency fees• Solicitor fees• Surveyor costs• The stamp duty you paid when buying the property originally• The cost of any improvements, such as extensions, conversions or energy efficiency improvements like double glazing
You’ll pay no capital gains tax if:• The property you’re selling is your main residence• Your ‘gain’ falls below your annual tax-free allowance and you haven’t used this• You’re gifting your property to a spouse or civil partner• Your rental property is owned by a limited company and the company pays corporation tax on its profits