Learn how to minimise capital gains tax when selling investment property with these strategic approaches:

Strategy #1 – Timing the Sale Right

Capital Gains Tax (CGT) is calculated annually based on your tax year. Currently, there's a £6,000 CGT allowance that can offset gains from asset disposals in a year.

For instance, if you have two properties each with modest gains (£4,000 and £5,000), selling both in one tax year would incur CGT on the excess over £6,000. However, delaying the sale of one property to the next tax year resets your allowance, potentially avoiding CGT altogether.

Strategy #2 – Keep it in the Family

Transferring or selling investment property to a spouse can defer CGT liability, provided you've lived together during the tax year. If the spouse sells the property later, they may face CGT on any further increase in value. Placing property in trust is another strategy to defer CGT.

Strategy #3 – Offset Losses

Offset capital gains with losses from other investments within the current or previous tax years. Excess losses can nullify CGT liability for the year.

Special Cases

Principal Private Residence Relief (PPR) Selling your main or only home usually exempts you from CGT on gains. However, buying a property as an investment doesn't qualify. If you've previously lived in the property, you may be eligible for relief for the period of residence plus the most recent nine months.

Incorporation of Your Property Business

If you're a sole trader or part of a partnership, setting up as a property business can defer CGT by converting gains into company shares. Tax is payable only upon selling the business, provided it operates as a genuine business.

Disclaimer

Tax laws change regularly, and individual circumstances vary. Seek personalised advice from a tax professional to understand specific CGT implications for your property transactions.

For comprehensive property investment advice, including tax strategies, consult with our experts. Book a call today for tailored insights into maximising returns on your property portfolio.