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60 day rule for Capital Gains Tax on residential properties explained

Although you might have heard of Capital Gains Tax before, you may not be quite sure what it is. In general terms, it is a tax charged when you sell any capital asset which has risen in value over the time you own it. Property is a common example of an asset to which CGT can apply and something to be aware of when selling.

It is also worth noting that Capital Gains Tax for properties is calculated using different rates for different types of property. A recent October 2021 change saw CGT on residential properties having to be reported within 60 days of sale completion. In addition, any taxable gains must be paid within 60 days of sale completion too.

Capital Gains Tax for other assets and residential properties

For other assets which make a capital gain, the deadline for reporting them was the 31st January following the ending of the tax year any gains were made in. For residential property though, the new rules shown above are different. In addition, it is also key to note that the 60-day rule also applies to gains made on the disposal of commercial property. This is not solely limited to selling commercial or residential property either. CGT could also apply if you gift a property or transfer it to someone other than your civil partner or spouse.

What happens if you do not hit the 60-day deadline?

As noted above, the new guidelines from HMRC give 60 days after sale completion to report and pay any taxable gains relating to residential properties. But what happens if you miss this deadline? The most common outcome is either interest charged on payments or additional penalties being applied by HMRC. Needless to say, both are best avoided and it is, therefore, wise to stay within the 60-day rule.

What rate of tax will I pay for CGT on residential property?

The rate of Capital Gains Tax is normally higher than what you would see on other assets. For residential properties, this means that higher rate and additional rate taxpayers are charged at 28%. Basic rate taxpayers are charged at 18% and then 28% for any gains which sees them rise above this basic rate banding. It is also key to remember that most taxpayers in the UK have an annual CGT allowance to use. For the current tax year, this allowance is £12,300.

Contact SRB Associates for help with CGT

Although the above runs through Capital Gains Tax for residential properties and the 60-day rule briefly, you may still need help from an accountant when working yours out or reporting it to HMRC. Here at SRB Associates, we are a team of professional and friendly accountants who are waiting to assist. From our base in Melton Mowbray, we serve the surrounding area and clients across the UK. Get in touch on 01664 503 681 for more details