There’s a lot of admin involved in selling a home, and it’s important to make sure that you have everything in order. One of the most common questions people have regarding the sale of a residential property is about capital gains tax. Specifically, do you need to pay capital gains tax on any profit you make when you sell your home?
In most cases, Private Residence Relief prevents CGT from being applied to gains made on the sale of a property. However, there are requirements that need to be met in order to receive this, and a few different factors that can affect whether you get Private Residence Relief.
What factors are involved in PRR qualification?
One factor that affects whether or not you’ll qualify for PRR is the amount of time spent living in your property. So long as it’s been your primary residence for the duration of your time there, and you haven’t been away for any lengthy periods, there should be no problem. However, if you’ve been away from the home for more than three years, you might end up having to pay CGT.
There are some absences that are covered as far as PRR goes. The first 24 months of ownership and last 9 months of ownership are excluded from consideration – though the first 24 months is only if you’re waiting for work on the property to be completed, or for your previous property to be sold. In addition, if you’ve had to reside somewhere else because of your job, then so long as it’s an absence of no more than four years, you are still seen as having occupied your main property.
One of the other major considerations is the use of a property for business. If you’ve used any part of your house for business and business only, it won’t be exempt from Capital Gains Tax – though certain businesses such as foster care are still exempt. However, if you’ve used the space for non-business purposes as well, it still qualifies for PRR.
Do I have to claim profit from selling my house?
Finally, one of the most common questions is how this applies to a property that is joint-owned by people in a marriage or civil partnership. In this case, if one member of the couple qualifies for PRR, they both will – making any gain free of CGT.
The admin around selling a property can be tiresome – so you want to make sure that everything is as easy as possible. UK Property Cash Buyers offer a streamlined process that could see your house sold within a week! Get in touch today for a free valuation.