Whether you're a landlord looking for help maximising the tax efficiency of your portfolio whilst staying compliant or looking for tax advice on buying or selling a property - MJH Accountants Preston can help.
Buying your property
You pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price. The current SDLT threshold is £125,000 for residential properties and £150,000 for non-residential properties.
Rates increase as the cost price increases. However, there are some reliefs for first-time buyers.
When buying your second and subsequent properties you’ll usually have to pay 3% on top of the normal SDLT rates. Keeping your initial residence and buying an additional property to move into can result in the 3% premium being charged and advice should be sought prior to purchasing.
Letting your property
If you let out a property you are likely to be liable to income tax on any profit you make. Your profit is the amount left once you’ve added together your rental income and taken away the expenses or allowances that you can claim. There are different rules to follow if you’re:
- Renting a room in your house
- Letting a property as a furnished holiday letting
- Renting out foreign property
- Letting a property in the UK while you live abroad
You can get up to £1,000 a year tax-free allowance for property income.
Selling your property
Usually, when you sell your own home you benefit from private residence relief and therefore don’t pay any Capital Gains Tax. However, this doesn’t apply unless all of the following conditions are met:
- you have one home and you’ve lived in it as your main home for all the time you’ve owned it
- you haven’t let part of it out – this doesn’t include having a single lodger
- you haven’t used part of it for business only
- the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
- you didn’t buy it just to make a gain
Married couples and civil partners can only count one property as their main home at any one time.
You may have to pay Capital Gains Tax if you make a profit when you sell property that’s not your home, for example:
- buy-to-let properties
- business premises
- inherited property
Your gain is usually the difference between what you paid for your property and the amount you got when you sold it.
You can deduct costs of buying, selling or improving your property from your gain. These include:
- estate agents’ and solicitors’ fees
- costs of improvement work, for example for an extension (normal maintenance costs, such as decorating, do not count)
The capital gains tax allowance is £12,300 per annum.