Tax Advice on How to Get Tax Relief from Selling a House
Do you want good tax advice? Are you selling your home? If you are, hold your horses. You may not need tax advice at all as people selling their main home don’t have to pay tax on the house.
If the property you’re selling is your main home, however, chances are you’ll pay Capital Gains Tax.
If you want to be covered by this tax exemption, you have to meet the following requirements:
· This property has been your only house all throughout the time in which you owned it
· You bought the property and paid for it as your main house instead of as a means to earn profit
· Your house’s total land area, including the front and backyard, does not go beyond 5,000 square meters
· Over the entire period that you lived in the house, not once did you use the house other than as a shelter for you and your family.
Moreover, if you’re in a civil partnership or are married, and not separated, you and your partner should have only one residence.
Tax Advice: How to Get the Tax Relief
To apply for the tax advice, you have to work out the time period wherein you owned the home. This time frame starts on the day you acquired or purchased the house, and ends on the day you formally disposed of it.
The last 36 months (three years) of your ownership qualify for relief, even though you did not live there throughout those three years. What’s important is the property was your only living space at some point throughout the time that you owned the property.
Restrictions. When Will You NOT Get the Relief?
You will not get a chance to enjoy the full amount of the relief if:
– You purchased the house with the primary intention to earn money from selling it.
– You have rented out part or your entire home. If you’ve taken in lodgers even just once, you may be eligible for the Letting Relief instead.
– You have used a part of the whole house for business purposes.
– The site of the garden plus the house measures beyond 5,000 square meters.
Losses vs. Gains
You can be qualified for the Private Residence Relief if you make a gain after the property is sold. However, if you make a loss instead, whatever gains you’ve made won’t be able to set off the loss.
The relief can still apply if only part of your house meets the Private Residence Relief criteria.
Don’t Forget the Paperwork
Of course, no tax relief will be granted if you don’t show HMRC the right documents. HMRC suggests that the following documents be kept:
1. Contracts for the property’s purchase, sale, exchange or lease
2. Documents about properties acquired but not bought, i.e. properties given as a gift
3. Papers that record your calculation of losses or gains
4. Information that say you put a property into a trust or given it away
5. Records of your sale, improvement, or purchase of the property. Examples are check stubs and bank statements.
Now that you have a good idea of this task advice, consider the situation of your property sale and take advantage of the tax relief.