HMRC Tax Regulations That Every Estate Agent Should Know
English: Estate agent in Poulton-le-Fylde, Lancashire, England. Formerly the Poulton Savings Bank. (Photo credit: Wikipedia)
If you are considering selling your home, make sure you don’t get stung by an unexpected tax bill. Issues can arise, particularly when selling your second home. Before you contemplate putting your house on the market, make sure you are fully aware of regulations surrounding property tax.
Tax
Calculating tax can be a minefield, especially when it comes to property trading. Businesses that profit from property gains will be liable for tax whereas individuals who are selling their main home will usually be exempt, unless it is a second home.
Estate Agents
If you are considering buying or selling your home, then your first port of call is anEstate Agent. There are estate agents in Ipswich and other towns in the UK who can handle every aspect of marketing properties. Local agents can offer a more personal service, priding themselves on their knowledge of local property trends and prices.
Estate agents in Ipswich, can arrange the selling, renting and management of houses and other properties in the Suffolk area. They will also be able to recommend a solicitor or conveyancer needed to prepare legal documents and carry out searches.
Ten key points about Property tax
1. If you are an individual who is selling property that is not your main home, you will need to pay Capital Gains Tax on any profits made.
2. If you are a business buying and selling property then you will need to pay income tax, not Capital Gains Tax on any profits.
3. If you are a sole trader or a partnership, you will need to complete a Self Assessment Tax return
4. If you are a director or shareholder in a business which carries out property trading, any profits are part of the company’s profits. The company will need to pay Corporation Tax.
5. If you are selling your home, there is usually no capital gains tax to pay, as you are entitled to Private Residence Relief. This assumes that the property is your main place of residence and you have used it as your own home and nothing else.
6. Capital gains tax will need to be paid on any property that is being used for business purposes, including buy-to-let property, second homes (both in the UK and abroad), business premises, such as a shop or factory or land.
7. If you sell or give away property that is not your main residence to your spouse or civil partner, you don’t usually pay Capital Gains Tax. You must have lived together for at least part of that tax year. However, if they then sell that property you will need to pay tax.
8. You may be liable for Capital Gains Tax if you dispose of a property that is not your main home to another family member, including a spouse or civil partner, if you haven’t lived with them during that tax year.
9. If you give away your main home to a family member you will not have to pay Capital Gains Tax as long as you are entitled to Private Residence Relief.
10. If you require more information on property tax there is plenty of advice available on the HMRC website. An Accountant can offer further help.
American Tax Laws
American tax laws are different to those in Britain. You will need to consult the IRS for regulations surrounding property trading in the USA.
It can be a tricky business organizing your tax affairs, especially when it comes to buying and selling property. If you are an estate agent it can help if you have some basic tax knowledge to pass on to your clients.
AUTHOR BIO
David Patston is a former estate agent who now writes on the subject for various websites and blogs. He lives in London where he manages a portfolio of his own properties.
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Category: Mortgage
