Question:
If we sell our second property that we rent out, do we pay tax on the complete sale price or the differential of what we paid and the sale price?
Arthur Weller replies:
You pay capital gains tax on the differential of what you paid and the sale price. See HMRC’s Capital Gains manual at www.gov.uk/hmrc-internal-manuals/capital-gainsmanual/cg14200. You can also deduct from the gain any enhancement expenditure (i.e. money spent on improving the property) and incidental costs of purchase and sale (see www.gov.uk/hmrc-internal-manuals/capital-gainsmanual/cg15250).
