What taxes are involved when buying and selling for profit?

Property taxation, as an area of advice, is incredibly specialised. Do not treat this article as a complete guide but, rather, as a basic introduction. A broker can help you with tax information when buying a home.

If you’re trying to ensure that you’re paying your tax correctly and taking as much profits as possible from your investments then feel free to drop us a line. We can happily recommend you some accountants that are more than qualified to give you the best advice regarding trusts etc. For any advice related to buying and selling property for profit, please get in touch with us and we will get an adviser on the case right away.

Buying your home

Land tax, more often referred to at stamp duty, is an amount that needs to be paid when a property of £125,000 or more is purchased. The rate at which you pay tax also depends on the property value.

For properties over £125,000, 1% of the purchase price is paid in tax. This increases once you reach £250,000 to 3% and then anything after £500,000 is paid at 4%.

Selling your home

The first thing to consider when selling your home is capital gains tax. This only applies if it relates to a second home that you own. The assumption is, perhaps unfair in certain circumstances, that buying more assets means that you have the intention of making a profit on it. This means that any profits made on the investment should be subject to taxation when the property is sold off.

Just as with stamp duty, capital gains taxation rates are calculated in brackets based on profits. Any gains made at the end of a year are taxed.

Inheriting your home

As well as capital gains tax you also need to consider inheritance tax. This is paid on the entire ‘estate’ and taxes all that is owned upon death. It is only applied when your entire ‘estate’ is calculated to be worth more than £285k. If the estate is left to your legal partner, then the tax doesn’t apply, even when above the threshold.