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Airbnb CGT

If you’re letting out your property on Airbnb or a similar platform, you’ll need to know about the tax regulations that apply to you. Tax is notoriously tricky to navigate, but having an awareness of your liabilities will ensure there are no nasty surprises.

Most hosts are aware of their Income Tax liability. However, you may not know that when selling a property you’ve been renting out via Airbnb, Capital Gains Tax (CGT) applies to the profit you make. Let’s take a look at when CGT is payable and how much you’ll have to pay.

Do I need to pay CGT?

If you have been renting out a room in your main home and then you choose to sell up, the good news is you won’t be liable for CGT. If, however, you have a dedicated short term let or a second property that you sometimes rent out, you will need to pay tax on the profit you make.

What is the CGT allowance?

In the tax year 2024/25, each individual receives a Capital Gains Allowance of £3,000. That means if you buy an asset for £10,000 and sell it later for £13,000, you won’t need to pay CGT. However, any profit made above this threshold is taxable. For property, you will pay either 18% or 28% on your profit, depending on whether you pay the basic or higher rate of Income Tax.

How much CGT will I need to pay?

Calculating your CGT bill can be complex, which is why many people use accountants for Airbnbs that they are looking to sell. Working out the profit is simple enough: you subtract the purchase price of your property from the amount you sell it for. However, you will then need to make some or all of the following deductions depending on your situation:

  • Your Capital Gains Allowance
  • Stamp duty you paid when purchasing the property
  • Costs for making improvements to the property (i.e. those that have added value such as an extension)
  • Solicitor and estate agent fees

The resulting figure is what you will pay CGT on. You’ll pay 18% if you’re a basic rate taxpayer, or 28% if you’re a higher rate taxpayer.

Renting out your main residence

If you live in your main home while renting out a room to guests on Airbnb, or you let it out while you’re on your annual holiday, for example, you won’t need to pay Capital Gains Tax when you come to sell the property. However, if you have owned a property for 10 years, for example, lived in it for five years and rented it out for five years on Airbnb, taxation applies.

When selling the property, you would be able to claim Private Residence Relief on the five years you lived there. However, you would owe CGT on the years during which you were letting it. In these cases especially, it’s worth asking a reputable accountant for help with your calculations.

Help with CGT for Airbnb rentals

If you are selling a property that has been let via Airbnb, HMRC may need to be notified and your tax paid. At Ibiss & Co, we offer tax advice to Airbnb hosts, and can help you calculate your CGT liability. Contact our offices in Barking, Tooting and Walsall today to find out more.

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