Capital Gains Tax Property Sale

publication date: Oct 7, 2010
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

Capital Gains Tax Property Sale

If you own more than one property, it is likely that you will have to pay Capital Gains Tax (CGT) when it’s time for a property sale. It is essential to understand what your Capital Gains Tax liability is and more importantly, how you can reduce it.

Capital Gains Tax is charged on properties that are not classed as ‘your main home’. For example if you have bought a holiday home abroad or one in the UK, or you have bought a property for your son or daughter to go to university, then you are likely to owe Capital Gains Tax.

Capital Gains Tax is calculated based on the ‘profit’ that you make when selling your property and it is based on who owns the property and indeed what tax bracket you are in.

Key facts about Capital Gains Tax


  • You don’t pay Capital Gains on any profit from a property sale under £10,100*
  • If you are a 20% tax payer, you pay 18% on profit from a property sale over £10,100
  • If you are a 40% or more tax payer, you pay 28% on profit from a property sale over £10,00

The amount of tax you can pay can be shared with other owners, for example if you buy a property with your partner and own 50% of the property each, then you can both use your Capital Gains Tax allowance to reduce the overall amount of tax you pay.

Another way of reducing your Capital Gains Tax bill is that if you are married and one partner is a 20% tax payer, the other a 40%, you can transfer all of the property to the 20% tax payer, so they own 100% and then you only pay as a couple 18% on any profit made.

There are many other ways of reducing your Capital Gains property sales tax bill, especially if you have lived in the property for a period of time. There are also improvements such as fitting a new boiler that you can claim against your Capital Gains Tax bill so reducing the amount of profit you declare. This is however a complicated tax which prior to selling your property, you should have checked out with a specialist property tax company.


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