Buy-to-letTax Associated With Buy-to-let

There are several taxes you may need to take into consideration:

Stamp Duty

This is a tax you will have to pay when you purchase the property.  Stamp Duty is payable on any property over £125,000. The amount you pay depends on the value of the property. You will have to pay 3% stamp duty for any Buy-to-Let property. Visit www.gov.uk/stamp-duty-land-tax-rates for the most up to date Stamp Duty thresholds.

Income Tax

You may have to pay income tax on the rent you receive. Rental income must be declared on a Self Assessment tax return (the amount you pay will be subject to your tax banding).

Capital Gains Tax

You may have to pay this when you sell the property if the value has increased significantly over the period of ownership.  If you sell it for less then there is no capital gain and so no tax due.  There is an annual tax-free capital gain allowance of £11,100 for tax year 2016/17.  There are a number of expenses you can deduct to reduce the overall capital gain.  Namely Solicitor's fees, Stamp Duty, Estate Agents fees and any loss made on the sale of another Buy to Let property the previous tax year. 

Inheritance Tax

Property assets will form part of your estate so you should talk to your adviser about tax planning.

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