Did you just sell your property or planning to sell your property? UK Property Accountants is here to help you in computing the capital gains tax. Capital gains tax computation is not just adding and deducting few numbers. It is more about reviewing your situation and claiming the relevant capital gains tax reliefs and expenses to reduce your overall tax bill. At UK Property Accountants, we provide guarantee of specialist tax advice for your capital gains tax computation.
Capital gains is calculated by deducting cost of the property from the net sale proceeds. Net sale proceeds mean selling price less selling costs such as agent’s fees, legal fees, etc. If you sold your house for £300,000 and incurred agent fees & legal fees of £4,000 for the sale, your net sale proceeds will be £296,000.
In the costs of the property, you can include the original purchase price, other costs incurred for the purchase such as stamp duty & legal fees and costs of improvement of the property during your ownership such as extension work on the property. For example, you purchased a house for £150,000, paid stamp duty & legal fees of £3,000 for the purchase and incurred capital refurbishment expenditure of £20,000 during your ownership, your total costs will be £173,000.
The capital gains on this sale will be £123,000 (Net sale proceeds £296,000 less total costs of £173,000). As you will also get £11,700 capital gains annual exemption, your taxable capital gains will be only £111,300 in this example subject to any capital gains reliefs applicable to you.
In most of the cases, the computation will not be as straightforward as in the above example because of specific tax treatment of various items in the capital gains tax computation. So, landlords are advised to seek advice from property tax experts for capital gains tax computation.