For richer, for poorer... mainly richer, if you know this one tax rule

A landlord asked us this week: "I'm thinking of selling, how much Capital Gains Tax will I actually pay?" Most landlords find out the real answer after they've sold. By then, it's too late to change it.

Capital Gains Tax on a rental property is 18% or 24%, depending on your income. You get £3,000 tax-free. Everything else is legitimately reducible, if you plan before you complete, not after.

The rules

Basic rate taxpayers pay 18% on the gain. Higher and additional rate, 24%. Everyone gets £3,000 tax-free first. You can deduct buying and selling costs, plus genuine capital improvements, an extension, a new kitchen where there wasn't one before, but not routine repairs or redecorating. And you've got 60 days from completion to report and pay, not your usual Self Assessment deadline. Miss it and penalties start immediately.

The hack: split it with your spouse

Transfers between spouses trigger no gain, no loss, no tax. Transfer half a property to your spouse before you sell, and you both use your own £3,000 exemption, £6,000 combined instead of £3,000. If your spouse pays tax at a lower rate than you, their half gets taxed at 18% instead of 24%.

£2,340 saved, on one property, just by transferring half the ownership before the sale. One thing worth checking first: if the property's mortgaged, your spouse taking on a share of that debt technically counts as consideration for Stamp Duty. The good news, spousal transfers are exempt from the additional property surcharge, so only the standard bands apply, and those start at £0 below £125,000. For most typical buy-to-let mortgages, that means the SDLT bill on the transfer is nil. Only worth double checking on a larger mortgage, where half the balance pushes into the higher bands.

The bottom line

Every one of these levers only works before you sell. Once completion happens, the gain is fixed and the planning window is shut. Talk to your accountant while you're deciding to sell, not after you've already accepted an offer.

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