Taxes when selling a property

What is a 'gain'?

The gain is generally calculated as the difference between the price you paid when you bought the property and the price you sold it for.

Capital Gains Tax (CGT)

If you own the property personally, you'll pay Capital Gains Tax on gains above £3,000.

Costs of buying, selling and improving the property would reduce the gain, and there is also an annual capital gains tax-free exemption (£3,000 for the 2024/25 tax year) which can also be deducted, if not used elsewhere.

Capital gains tax would be due on any remaining gain (18% for gains in the basic rate band and 24% for gains in the higher rate tax band) for personally held properties.

Capital Gains Tax rates

Corporation tax on gains

Whilst it's not technically called 'capital gains tax', you still have to pay tax on the gain when you sell a property owned in a limited company.

• Limited companies pay corporation tax on the gain.

You're not entitled to use your personal capital gains tax-free allowance here.

However, for higher rate tax payers, the overall rate of tax can be lower via a limited company than when owned personally.

Reducing tax on gains

There are many different ways to reduce your tax liability when selling a property.

As mentioned in the previous chapter, it's important to keep track of all of your expenses. Some of the expenses you made when you bought your buy-to-let can be offset against the profit from the sale, which can help reduce the tax due.

If you're selling your property, we recommend having a tax call with one of our specialist property accountants. They can recommend strategies specific to your situation, helping you to be as tax-efficient as possible.