What is the UK property tax when an investor buys and sells?

If you invest directly in the UK property, then it is ascertained that you will have to pay a good amount of tax. But there are few techniques that can be utilized to reduce the property tax burden on investment. Here, we discussed the taxes that you’ll incur while making an investment in the UK property.

You have an option to invest straight, in your name or partnership with your spouse. There are different tax rules for distinct scenarios. Over here we will specify the tax liable on the direct investment made by an individual or partners in UK property.

Basically, there are two taxes that are levied on buying and selling of investment property in the UK. These two taxes levied on investor by HMRC are as follows-

I. When you buy a property you are liable to pay Stamp Duty Land Tax. SDLT rate is subject to the Tax slabs of Investment property tax.

The amount of tax you pay on investment property depends on the worth of the investment. If you buy property worth £40,000 or less, you are not required to pay SDLT. But if the price is above than this, you will have to pay SDLT along with 3% on the overall price paid for the property.

Investment Property SLDT Rates are as follows:

The Stamp duty and land tax are required to be paid within 30 days starting from the day on which you will acquire the possession of the investment property. You have to make sure that you hired a competent solicitor to work out everything within the time limits given by HMRC.

II. While selling your UK property you have to pay Capital Gain Tax (CGT).

CGT is liable on every investor who sells an investment property in the UK. The amount on which you will pay tax depends on five components:

· Expenditures incurred

· The purchase price of the property

· The market value or selling price

· Your unclaimed CGT allowance

· Your personal incomes from other sources

Generally, the sale price is utilized to calculate the capital gain. But if you sell your property below market value or you gift your property, the tax will be calculated on the market price of the property. There are certain costs that are needed to be reduced from your gain before computing the tax amount. These deductions include:

· Solicitor’s fees

· Improvement or regeneration cost

· Estate agent fees

However, computation of the tax on the UK investment property is an extremely complex process, it is advised to take help of the expert Property Tax Adviser for working out the tax due.