Taxation of real estate

Taxation of real estate provides a brief overview of tax provisions that can apply to property transactions. The explanations here are guidelines from the perspective of the valuer and not a detailed analysis of the overall tax system in each area.

  • The basis of market value for taxation purposes differs from the basis of value for conventional purposes.
  • Income and corporation tax may be payable on rental income. Certain exemptions and allowances are available for specific properties. (For detail on capital allowances, see the separate section by Andrew Green.)
  • Tax may arise on capital gain made by an individual or a company following the disposal of an estate or a major interest in a property. Partial or full relief can be available in certain instances.
  • Rules on trading in land have been tightened to bring more profits into tax.
  • Inheritance tax may arise on the transfer of a property or a major interest in land. Certain qualifying transfers can benefit from an exemption or relief.
  • Annual tax on enveloped dwellings (ATED) applies to residential property held in company vehicles and the like and occupied by a person connected to the holding vehicle.
  • Stamp duty land tax applies to transactions involving land and buildings.
  • Value Added Tax applies to transactions involving land and buildings. The VAT treatment differs depending on the use of an asset and the status of the parties to a transaction.

The Finance Bill 2022 (published on 2 February 2022) introduced changes to several elements of taxation. See the Finance Act 2016 changes. The announcements made in the Bill concerning updated provisions on the Residential Property Developer Tax (RPDT) and the Qualifying Asset Holding Company (QAHC) herald further changes to happen in 2023.

Taxation of real estate is maintained by Vince Harney of Anisorian Real Estate.

Related RICS standards and guidance