Question:
Does anyone know that if you purchase a second home and then decide to sell it,Do you have to pay 40% capital gains tax and does they still apply no mater how long you have had that property,or is there a time factor involved
Answers:
If you have lived in the second home, you could elect for it to be your main residence, and avoid CGT. The election has to be made within 2 years of acquiring the second residence.
If you can't do that, the gain will be taxable, but you can still get taper relief. Basically, you deduct 5% of the gain for every year of ownership apart from the first 2 years, with a cap of 40% taper relief (so 60% is taxable). You get an annual allowance of £9,100 per person too.
CGT is charged at 40% for higher rate taxpayers, and 20% for everyone else.
Hi you wont have to pay capital gains if you have owned the property for over 1 year.
If you sell a property that isn't your sole main residence, then you may be liable for CGT on the PROFIT (if any) which you make. The rate of tax depends on your circumstances, but could be as high as 40 %. How long you own the property is irrelevant, except so far as taper relief is concerned. See an accountant.
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