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Property
Capital Gains Tax Advice – Residential Property
What is capital gains tax, who does it affect and what does it mean to you? If you possess property which you are selling or can foresee yourself selling at some point in the future, you should be able to answer these capital gains tax UK questions. Thanks to our wonderful law-makers, the calculation of capital gain property tax seems to become more complex with each passing year and so you really do need, at least, a basic comprehension of capital gains tax. However, you would be doing yourself a great favour if you were to acquire a more in-depth understanding of capital gains tax as being aware of all the breaks and exemptions available to you will definitely prove to be advantageous.
First of all, capital gains tax , as the name suggests, is a tax levied on capital gains, i.e. any profits realised from the sale of assets or investments. In this way capital gains tax UK can be viewed as a form of income tax as you are being taxed on the income generated when you sell assets at a profit. However, profits are not always realised and, when this happens, a loss is usually incurred. Because of this, capital gains tax is levied only on your net capital gain (capital gains minus capital losses). Although the probability of making a capital loss on the sale of UK property is far less likely than making a capital loss on the sale of shares and other investments.
The Annual Exempt Amount (AEA).
Everyone is exempt from capital gains tax UK up to a level known as the Annual Exempt Amount (AEA). This figure changes from tax year to tax year and is set at £8,500 for the 2005/6 tax year. This exemption applies to a specific tax year and may not be carried forward to another. However, capital losses incurred can be carried forward indefinitely and will be set off against capital gains, as they occur.
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