Residential Property Tax: What Can I Expect To Pay When I Sell?
Capital Gains Tax can be awkward ...
POSTED BY JONATHAN VOWLES ON 22/10/2019 @ 8:00AM
Bob Dylan wrote song lyrics claiming that the times they are a-changing, however, they are applicable to lots of things, especially to residential property tax ...
If you're worried about residential property tax when you sell your home, get it touch!
copyright: rattana123 / 123rf
Hence this blog post to wrap up the issues surrounding Capital Gains Tax and the forthcoming changes. As this isn't a 500-page book, there is lots of detail that you will be signposted to rather than me going into detail.
As a caveat, these points are based on the proposed rules from April 2020, not the actual rules, so do check with your chartered accountant:
The message here is be prepared in advance. The new time limit for telling the taxman is within 30-days from completion when selling a residential property from April 2020. This time limit is for both making a tax return and paying any necessary tax. Make sure that you have spoken to your chartered accountant and you are ready, especially if you are going to have a tax bill to pay!
Registering for self-assessment
If the only reason for thinking about registering for self-assessment is to be able to tell the taxman about a property gain, then the new 30-day reporting requirement means you don't have to register.
What if I don't have a capital gains tax bill?
The rules are different if you are a UK resident or a non-resident. If you are a UK resident and work out that you don't have a tax bill, then the new 30-day reporting and payment requirements don't apply. For example, if you are selling your home and any gain is completely covered by the Principal Private Residence Relief, then you don't need to report within the 30-day period. If you are a non-resident, then you must make a tax return within 30-days, even if no tax is due.
Principal Private Residence relief
PPR relief is available to make sure that you don't pay tax on your home when you sell it, but like a lot of tax breaks, there are rules and criteria. You need to be careful if:
The grounds and buildings are more than about an acre
You have used the building for business purposes
You bought it to sell it on (rather than to live in it permanently)
You have not lived in your home for longer than just a holiday
You have let your home out
What if I gift my property?
Tax is still payable when you gift property. The only two exemptions are gifts to a charity and gifts to your spouse.
Capital Gains Tax can be awkward and the forthcoming 30-day reporting rule is bound to make it even more so! Be prepared and speak to your Chartered Accountant early on in the process rather than waiting until the last minute.
Until next time ...
Would you like to know more?
If you're planning to sell your property soon and want to ensure you minimise any residential property tax, then do give me a call on 01234 752 566, leave a comment below or click here to ping over an email and let's see how I can help you.
About Jonathan Vowles ...
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas, which can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.
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