What is property capital gains tax?

Property capital gains tax is a tax on the profit you make when selling a property. What is taxed is therefore not the whole sale price but the increase in value – put simply, the difference between what you paid on purchase and what you receive on sale.

What the tax applies to

The basis is the profit from the sale. Certain items may be taken into account alongside the acquisition costs, for example demonstrable investment in the property. Because the exact calculation depends on the date of purchase, the use and the evidence, we give no fixed percentage here. What matters is that the amount is usually paid over during the sale, often through the person drawing up the contract.

What influences the amount

Date of purchase

Whether the property was acquired before or after certain cut-off dates affects the calculation. Properties held for longer are treated differently from those bought recently.

Use and exemptions

Own use as a main residence or a builder's exemption can mean that no tax arises. More on that in the main residence exemption.

Property capital gains tax sounds complicated but follows a simple logic: what is taxed is the profit, not the price.

A simple example to picture

Imagine you bought a flat years ago and sell it today at a higher price. What is taxed is the difference between then and now, not the full sale price. Demonstrable investment in the flat can reduce the taxable profit. It is therefore worth keeping receipts for refurbishment and larger purchases. The better your records, the more precisely the tax can be calculated – and the less you may pay. We help you gather the right evidence in good time, so that nothing important is missing at settlement.

What this means for you

Factor the possible tax into your decision to sell, so that you know your true net proceeds. An overview of all the taxes on a sale is given in What tax is payable when selling a property?. We accompany your sale, structure the documents and tell you in good time when a detailed tax review makes sense. Arrange a conversation and we will assess your case together.