How much CGT do I need to pay when a property sale falls through?

Hi,

Our second home sale fell through after exchange of contracts, and the 10% deposit was forfeited by our buyers. I understand Capital Gains Tax is due, but at what rate, the higher property rate (even though the property wasn't sold) or the lower rate?

Many thanks in anticipation.

Rebecca

Rebecca, sorry to hear about your transaction falling through. Property transactions can be such a heartache. I would recommend discussing this with a chartered tax adviser or perhaps ringing HMRC for full clarity, but I can point you in the right direction.

The main rate of CGT has just been increased to align with those applying to the disposal of residential property; there is no longer any difference. But in your case, the precise timing of the gain doesn’t matter. You would have had to pay the higher residential rate even if the gain occurred before the budget as this relates to residential property. You can allow for your sales expenses and, assuming it occurred in the 2024/25 tax year, you may have use of your £3,000 CGT allowance (perhaps two if you have a spouse who also owns the property with you).

Finally, make sure you pay on time. Payment of CGT on residential properties must happen within 60 days; you can’t just put it in your tax return when it comes around. This often catches people out. There is a separate HMRC system for reporting this that you will need to sign up for.

There are a few other factors that would need to be uncovered to give you a confident answer about your specific liability, but hopefully these comments are a useful starting point!