When a house is not a home
When you sell a residential property which is not your main home, you will pay Capital Gains Tax (CGT) on any profit at 28%, or at 18% where the gain falls within your basic rate band.
These tax rates also apply to properties which have been let as furnished holiday accommodation. However, where certain other conditions are met, gains made from disposing of a holiday lettings business can qualify for entrepreneurs’ relief, in which case CGT will charged at 10%.
Where the nature of the property has changed over time, say, from a green field to a house, the rate of CGT may be lower on the part of the gain that relates to the time the property was just bare land.
A property may consist of a home, with non-residential buildings or areas (e.g., a paddock). In this case the gain on sale must be apportioned between residential and non-residential parts. You should keep records of the use of any significant land attached to your home, to demonstrate whether it was used as part of the residence or not.
Please talk to us before agreeing to sell a valuable property, as the tax calculations can be very complex.