Selling your home – potential Capital Gains Tax?
Generally, when you sell your home, you will not be liable to pay any Capital Gains Tax on the difference between the purchase and selling price due to Principal Private Residence Relief (PPR). This is true as long as it has been your main residence during the entire period of ownership but, unfortunately, there are circumstances when obtaining tax relief when you sell your home is not automatic.
Letting the Property
For example, you may have some tax to pay if you have let all or part of your house for part of your period of ownership. In that case a calculation must be made to determine the percentage of any gain that is, and is not, taxable. There are some additional reliefs that may be available such as “Lettings Relief” or the final period being exempt, however these are currently due to become less advantageous from April 2020 so timing of any future sales could prove costly!
Land
PPR relief is also given in relation to any land which you have had for your “own occupation and enjoyment with that residence as its garden or grounds up to the permitted area”. The permitted area is currently up to 0.5 hectares, including the site of the dwelling. But if the area ‘required for the reasonable enjoyment’ of the dwelling house as a residence – having regard to the size and character of the house – exceeds 0.5 hectares, then the ‘permitted area’ can be increased accordingly. Therefore, this needs to be considered if selling off part of your garden/land.
Using your home exclusively for business use
You may also incur a tax cost when you sell your home if you have used part of the property exclusively for business purposes – this would not include non-exclusive use, such as using a spare bedroom or study as a part-time home office, however, it could cover a separate home office used purely for business.
If you need any further advice on whether your home will be liable to Capital Gains Tax, please feel free to contact leanne@richardsons-group.co.uk.