Do you have to pay capital gains tax if you make a profit selling your home?
My husband and I have been lucky enough to have our house valued for considerably more than we paid for it in the early 1990’s and are now thinking of selling it and retiring abroad. Because it looks like we will make a reasonable profit from the sale of the house I had been advised by a friend that we might have to pay Capital Gains Tax. Is this correct?
Laila from Southampton
Capital Gains Tax (CGT) is usually payable on properties where you buy and later sell for a profit, you will be pleased to know however that there are exemptions and reliefs in place under certain circumstances.
If the property you are referring to is your main home and used solely for non-business purposes then you should qualify for Private Residence Relief which means that you will not have to pay any CGT on the sale of the property.
If the property is not your main home or is used for any purpose other than as your main dwelling you should notify your acting Solicitors at the time of instruction for further advice.
You can deduct costs of buying, selling or improving your property which reduce your gain. These include fees charged by estate agents and solicitors. You can also investigage offsetting the costs of improvement works, eg for an extension. Please note that normal maintenance costs such as decorating a room, do not count.
There is also some helpful information on the HM Revenue & Customs website at: http://www.hmrc.gov.uk/cgt/property/reliefs.htm
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