Selling your Rental Property

A blog by Mark Thurston

The amount of people owning a second property is growing with the rental market offering good returns as well as house prices rising.

However, if your property goes up in value there might be tax payable when you eventually come to sell this.

Selling your Rental Property

The main relief available against any gain is Principle Private Residence Relief. This means you do not pay any tax from the period you lived in the property and the last 9 months you held it for, regardless if you lived there then or not.

Everyone receives a Capital Gains Tax annual exemption (for 2021-22 this is £12,300) on which you don’t pay tax. This does mean that if the property is in joint names then you can make a gain of nearly £25,000 before any tax is due.

HMRC have recently introduced a 60 day filing deadline (this was initially 30 days but has been increased) meaning the sale is no longer just included on your personal tax return at the end of the year.

This filing is completed online using your government gateway account but can be completed by your accountant as an authorised agent.

To complete this you will need the following information:-

  • property address and postcode
  • date you got the property
  • date you exchanged contracts when you were selling or disposing of the property
  • date you stopped being the property’s owner (completion date)
  • value of the property when you got it
  • value of the property when you sold or disposed of it
  • costs of buying, selling or making improvements to the property
  • details of any tax reliefs, allowances or exemptions you’re entitled to claim
  • property type, if you’re a non-resident

You will then be required to calculate your gain and pay any tax within 60 days of the sale completing. This will need you to estimate your income for the year to see whIch tax bracket you fall in to.

The figures are then included within your self-assessment return, along with details of any tax already paid. This is taken into account and adjusted, if required once your income for the year is confirmed.

Should you have sold or be looking to sell a rental property then please get in touch with one of our team who would be happy to help you with this.

Call us on our Head office number – 01284 755 956

Email your client manager or if you are a new client, email info@gascoynes.co.uk

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