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Sam, Accountant
Category: Tax
Satisfied Customers: 14196
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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If I sell a property which has been rented to tenants, how

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If I sell a property which has been rented to tenants, how much CGT do I have to pay? Is it 40% of the entire selling price? There are no borrowings on the building.

Thanks for your question, I am Sam an I am one of the UK tax experts here on Just Answer.

The capital gain is the sale price LESS the purchase/acquisition price. This forms the initial gain.
From this figure,you can also deduct the costs to buy and sell (so legal and estate agent fees. stamp duty etc) and also the costs of any capital improvements.

Then what is left over, is considered for any tax reliefs - so if this property was once you main residence, then there will be some exemptions, and then finally looking at what is left - the first £10,900 (soon to increase to £11,100) is exempt - as this your annual exemption allowance.

Then the final figure left over is either liable to 18% or 28% - this is determined by how much you annual income is, on which income tax is considered, and if you have any unused basic rate band - then this allows the equivalent of that same amount of capital gain, to be charged at 18% and any balance then liable at 18%
For example, annual income of £24,475 - means there is £20,000 unused basic rate band, so the first £20,000 of any gain would be liable to 18% and any further gain at 28%.


Customer: replied 4 years ago.

thank you Sam. It has never been a main residence. I built the property in 2002 so does the cost of build get deducted?


Yes it does and also the value of the land


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