Selling a property is an exciting milestone, but it’s important to understand the tax implications before you complete the sale. Many homeowners in Scotland ask:
❓ Do I have to pay tax when selling my house?
❓ How does Capital Gains Tax work in Scotland?
❓ Do I pay tax if I sell a second home?
❓ What tax exemptions apply when selling property?
At Compass Estates, we believe in making property sales clear and stress-free. In this guide, we’ll walk you through the key tax considerations and how to ensure you’re financially prepared before selling.
Do I Have to Pay Tax When Selling My Main Home?
For most homeowners, the good news is no—there’s usually no tax to pay when selling your main residence.
This is because of Private Residence Relief (PRR), which means if the property is your only or primary home, any profit you make from the sale is tax-free.
To qualify for Private Residence Relief, the following must apply:
✅ You have lived in the property as your main home for the entire time you’ve owned it.
✅ The property has not been used for business purposes (e.g., running a business from home).
✅ The total property grounds do not exceed 5,000 square metres (including gardens).
However, if your property does not meet these criteria, you may be liable for tax on part of the sale.
Do I Have to Pay Tax When Selling a Second Home or Rental Property?
If you’re selling a buy-to-let property, second home, or investment property, you may be subject to Capital Gains Tax (CGT).
Capital Gains Tax (CGT) applies when:
- The property is not your main residence.
- You make a profit from the sale (selling price minus original purchase price and eligible deductions).
- The gain exceeds the tax-free allowance (£3,000 for 2024/25 tax year).
How Much is Capital Gains Tax on Property Sales in Scotland?
Capital Gains Tax rates depend on your income tax band:
- Basic Rate Taxpayers (earning up to £50,270 per year) pay 18% on property gains.
- Higher/Additional Rate Taxpayers (earning over £50,270) pay 24%.
Example:
- You bought a second home for £150,000 and sell it for £200,000, making a £50,000 gain.
- If you’re a higher-rate taxpayer, CGT would be 24% of £47,000 (£50,000 - £3,000 tax-free allowance).
- Your CGT bill would be £11,280.
What Costs Can I Deduct to Reduce Capital Gains Tax?
To lower your CGT liability, you can deduct:
✅ Estate agent and solicitor fees
✅ Home improvements (e.g., extensions, loft conversions)
✅ Stamp Duty/Land and Buildings Transaction Tax (LBTT) paid on purchase
What About Additional Dwelling Supplement (ADS)?
If you own multiple properties in Scotland, you may be familiar with the Additional Dwelling Supplement (ADS).
- This 8% surcharge applies when buying an additional property worth over £40,000.
- If you sell your main home within 18 months, you can apply for a refund.
If you’re selling to buy a new main residence, make sure you claim back ADS to avoid overpaying on tax.
When Do I Pay Capital Gains Tax on a Property Sale?
If you owe Capital Gains Tax, you must report and pay it within 60 days of completing the sale.
Failure to meet this deadline could result in penalties and interest charges from HMRC.
How to Pay CGT:
1️⃣ Use HMRC’s UK Property Tax Return system.
2️⃣ Calculate your total taxable gain (sale price - purchase price - allowable deductions).
3️⃣ Submit payment within 60 days of sale completion.
How Compass Estates Can Help
At Compass Estates, we understand that property sales involve more than just finding a buyer—they also require careful financial planning.
Here’s how we support sellers:
✅ Expert Property Valuations – We assess your property’s value to help maximise your profits.
✅ Guidance on Tax Implications – We help you understand Capital Gains Tax and ADS to avoid unexpected costs.
✅ Connecting You with Trusted Professionals – Need tax advice? We can recommend expert accountants to assist with your CGT calculations.
✅ Smooth, Stress-Free Selling – From valuation to completion, we handle everything to ensure your property sale is seamless.
Our team specialises in selling homes across Scotland, offering expert support every step of the way.
Book a Free Property Valuation Today
Thinking of selling your home? Start with a free, no-obligation valuation with Compass Estates.
Book your valuation today, and let us guide you through the selling process—from market appraisal to ensuring a tax-efficient sale.
Let’s make selling your home simple and stress-free!
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