If you decide to sell your house, you may be required to pay taxes to HM Revenue and Customs (HMRC). Prestige Tax and Trust Services discusses the applicable taxes on selling a home.
Selling your house
There are a variety of reasons you may decide to sell your family home. Pursuing this course of action, for example, can supply you with the revenue needed to provide for your loved ones. There are several key steps involved in selling your house, from putting it on the market to accepting buyer offers.
After you have accepted an offer, you will need to transfer ownership of your house to the buyer. This process is called conveyancing and it involves drawing up contracts which after they’re signed, make the sale legally binding. In some cases, you may then be required to pay taxes on the sale of HMRC.
Capital Gains Tax
Sometimes, as the seller you may be required to pay Capital Gains Tax to HMRC on the sale. However if you meet every single one of the following criteria, you will automatically receive Private Residence Relief, exempting you from any Capital Gains Tax obligations:
- You did not buy the property just to generate financial gains.
- You have one home, which was your main residence at some point while you have owned it.
- You have not let a part of the house out, although this does not include having a single lodger.
- You have not used a part of the property for business-only purposes.
- The property’s grounds measure under 5,000 square meters in total.
If you fail to meet these criteria, you can use the government’s calculator to determine how much Capital Gains Tax you may owe on the sale. We should note that if you are married or in a civil partnership, only one property is allowed to be considered your main home at any one time.
Stamp Duty Land Tax
It is important to remember that the buyer may also be required to pay Stamp Duty Land Tax on the property. This applies if the property in question is worth in excess of £125,000 and Stamp Duty Land Tax is charged on a sliding scale, based on the value of the house. The government’s Stamp Duty calculator can be used to determine any applicable charges. The buyer will still have to pay Stamp Duty in cases where they swap something of economic value e.g. shares in exchange for the house.
Prestige Tax and Trust Services
There are a range of legal issues you are required to take into consideration when selling a house. It is wise to enlist expert aide here, so you can fulfil all of your legal obligations. Prestige Tax and Trust Services provides conveyancing services, so you can provide ownership of the property easily.