Thinking of selling an investment property ? How much Capital Gains Tax will you have to pay ?

March 13, 2022

If I sell an investment property, how much Capital Gains Tax (CGT) do I pay?
 
In answering this question, we first have to establish the figure that is chargeable to CGT.
 
In simple terms the amount that is chargeable to CGT is the Sales proceeds less acquisition cost and incidental costs of the acquisition and disposal.

These costs typically include the following:

  • Stamp Duty
  • Legal and professional fees (such as the solicitor, valuer, surveyor, estate agent and accountant)
  • Advertising fees
  • Enhancement Expenditure

Just to note that the ‘enhancement’ must be reflected in the asset at the time of disposal. So if you build a swimming pool out the back and cover it over 10 years later and let the grass grow the initial spend on the pool is not allowable as it is long gone!

Details of the capital gain will need to be declared on an annual return. It is also on this return that you might claim loss relief. Word of caution here,capital losses can be carried forward not thrown backwards so here is one good reason to always get tax advice before pushing on with any disposal of property, timing can be critical!

Often forgotten but there is an exemption from capital gains tax on the disposal of a property purchased under an unconditional contract dated between 7 December 2011 and 31 December 2014. The requisite holding period = 4 years.