Will I have to pay tax when selling a house?

In this world, nothing can be said to be certain instead of death and taxes.   Benjamin Franklin

 

Obviously, the answer is yes, you will need to pay tax when selling a house, but I’m guessing you already knew that and hence why you are reading this guide. The taxman has changed a lot about stamp duty payable on your next purchase. This has particularly been the case in recent years, so it is always worth checking out the current rules before making any decisions.

Before you proceed, we should point out that this guide on taxes paid when selling a house is in no way intended to give tax advice. If you have any doubts over tax when selling a house, our advice would always be to speak to a qualified tax advisor.

Taxes paid when selling a house

There are two main types of tax when selling a house that you should be aware of. They are capital gains and stamp duty tax, and here is a little information about both to help you understand more.

Capital Gains Tax

Capital Gains Tax is the tax levied on the profit you have made when you sell or dispose of an asset. This one only applies if you are not selling your primary residence, so sorry, landlords and second homeowners, this is one for you to consider.  This is because of primary residence relief. 

Rules around the relief are explained briefly here on the government website. They get fairly confusing if you lived in the house you are selling for only part of the time you owned it. If that’s the case, I would recommend phoning the capital gains hotline on 0300 200 3300 or speaking to your tax advisor.

An important thing to note regarding tax when selling a house is that there is a capital gains tax allowance currently £12,300 (tax year 2020/2021), so you only pay capital gains tax on gain over the allowance (assuming you have made no other capital gains/losses.) 

Stamp Duty

Stamp duty tax only applies if you are buying a property, so you don’t need to worry if you are just selling. There has recently been an extension on stamp duty which you can read on our recent blog ‘What Spring Budget Means for Homeowners’. You can also contact love2move if you have any further queries

So there is just a short summary to answer the question ‘Will I have to pay tax when selling a house?’. If you have any further questions regarding taxes paid when selling a house or any other charges or fees, get in touch, and we will do our best to help you.

Mark Worrall

COO love2move

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