How Property Tax Laws Could Affect You

How Property Tax Laws Could Affect You



How property tax laws could affect you
Although it's a​ bit easier now than it​ used to​ be,​ what complicates matters is​ the​ number of​ laws that dictate what you​ can and can't do .​
And change is​ frequent - it​ seems as​ though every budget brings a​ change to​ tax laws .​
That can add even more complication for you.
You may not have come across them before,​ but there are a​ number of​ property tax laws that apply to​ you​ and any investments you​ make into property .​
They tend to​ affect income from rental properties,​ plus any profits you​ make from selling houses you​ own.
Use this simple guide to​ wade through property tax and understand how it​ could affect you.
First off,​ the​ good news .​
If you're selling a​ property that is​ your main home,​ you​ won't pay tax on​ it,​ as​ long as​ you​ satisfy certain conditions.
There's nothing in​ the​ conditions to​ scare you​ .​
You have to​ have bought the​ property and spent money on​ it​ primarily for use as​ your home rather than with a​ view to​ making a​ profit .​
The house also needs to​ have been your only home during the​ time you​ owned it,​ and you​ have used it​ as​ a​ place for your family and no more than one lodger to​ live.
There's also a​ condition that won't expose you​ to​ property tax unless you​ have a​ huge amount of​ land .​
The garden and area of​ grounds sold with the​ house can't exceed 5,​000 square metres,​ which is​ about one and a​ quarter acres .​
This includes the​ site of​ the​ actual house itself.
The law continues to​ say that if​ you​ are married or​ in​ a​ civil partnership and not separated,​ you​ and your spouse or​ civil partner can only have one home between you​ .​
And there is​ some good news - even if​ you​ don't meet all of​ these conditions,​ there is​ still a​ chance you​ will be entitled to​ property tax relief on​ your property .​
It's something you​ should talk to​ an​ accountant about.
So what if​ you​ have a​ second home - will you​ be liable for property tax on​ that? It's not such an​ unusual question these days .​
Buy to​ lets are becoming a​ more and more popular investment,​ and any tax laws that affect the​ profit you​ make from a​ sale will affect your future lifestyle (especially if​ you​ are investing in​ property for your retirement).
For property that's not your main home,​ you​ will normally be charged capital gains tax if​ you​ make a​ profit when you​ sell the​ house (and by a​ profit,​ the​ Inland Revenue means you​ make more money than you​ paid for it​ in​ the​ first place).
In the​ current tax year (2018-2008),​ you​ are allowed the​ first £9,​200 of​ your total taxable gains to​ be tax free .​
And there are a​ couple of​ other conditions to​ help reduce your tax bill.
First off,​ when working out your profit,​ remember you​ can deduct some of​ the​ costs of​ buying,​ selling and improving the​ property.
If you​ are unlucky and make a​ loss,​ you​ may be able to​ set that off against other profits you​ make .​
This is​ handy way to​ reduce your liability to​ property tax if​ you​ are a​ property developer who buys and sells houses regularly,​ and gets one wrong!
Finally,​ if​ you​ are living together you​ can transfer property to​ your husband,​ wife or​ civil partner without having to​ pay any capital gains tax .​
Unfortunately you​ can't give it​ or​ sell it​ cheaply to​ your children or​ anyone else; this will potentially make you​ liable to​ be charged tax.
Remember to​ get professional advice from a​ qualified person before taking any action .​
Don't rely purely on​ information contained in​ this article.
For further information please visit our website at​ www.propertytoday.co.uk or​ ring us on​ 01733 427177.




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