Property tax law

 

You may have already encountered taxation on your property, whether it is a house or a possession. However, there are many instances in which new tax issues can spring up.

Property tax law encompasses anything from buying, selling and living in your home to what to do in the instance of inheriting or being gifted a possession.

Buying property

Stamp duty may apply if you are buying property over a certain threshold; it currently applies to properties over £125,000, whether freehold or leasehold. The amount of stamp duty is equivalent to between one and five per cent of the whole purchase price.

However, this threshold is increased to £250,000 if you are first time buyer to help you get onto the property ladder. To qualify for this increased threshold, both yourself and any other persons involved in the purchase must not have owned property before in the UK or abroad. More information can be found on our page on stamp duty.

Selling property

Capital gains tax does not apply to your main home, but may apply to any further possessions you own over £6,000, which have increased in value on sale. Capital gains tax may also apply when property is donated by gift; whilst it does not apply to a spouse, you may be liable for capital gains tax if you choose to give your property to your children.

Rental income

If you let out one or more properties in the UK then you are liable to be taxed on the rental income you receive from your tenants. The taxable income is your ‘net profit’ e.g. your rental income minus your allowance expenses.

This also applies to any properties that you own overseas if your main and permanent residence is in the UK. First-time landlords and those entering the buy-to-let market could be unaware of how taxation will change and so specialist advice should ideally be sought.

Inheritance

Inheritance is another branch of property tax law and one which can be baffling or stressful. Often it is an area of law many do not consider until they are left an estate or possession in a will. Inheritance tax laws are quite separate from other tax laws so specialist advice should be sought in the event of dealing with an inheritance.

If you are unsure if any of the following apply to you, or want to enquire if you can reduce the amount of tax you are required to pay, it is recommended to seek further legal advice from a specialist property or tax solicitor.

For advice on inheritance issues, see our information page on inheritance tax.

Do you have a question regarding property tax law that requires legal assistance? Contact Law can put you in touch with a specialist tax lawyer to advise you on the ramifications of buying and selling property, letting out your property, and dealing with property that has been left to you by someone else. Please call us on 0800 1777 162 or complete the web-form above and we will call you back.

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