buying, selling property UK

Guide to buying and selling property in United Kingdom

Frequently Asked Question - What are the rules for private residences and Capital Gains Tax relief?

In general, the accommodation in which you live is excused from Capital Gains Tax when you intend to sell it. The property need to be your only or main residence during the period of possession. Throughout the last 36 months of ownership, the property has always viewed as your main dwelling even though you might not live there. Any periods of absence in excess of the periods allowed result in the relevant proportion of your sale profit being charged to Capital Gains Tax.

If you have detailed a part of your house aside for business purposes, then that proportion of your profits on the sale of the house will be taxable though if you don't have any rooms used exclusively for business purposes, you will not normally be liable to any Capital Gains Tax if you sell your house.

Special concern needs to be given to houses with a lot of land alongside them. If land is sold in excess of what HM Revenue & Customs regards to be a normal area of garden in character for the house that is being sold, then part of any gain on the sale of such extra land will be subject to Capital Gains Tax.

If you owned two properties, within two years of buying the second one you should have sent in a letter (called an 'election') in which you disclosed to the taxman which you were treating as your private residence for Capital Gains Tax purposes. Otherwise, the taxman will decide for you.

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