Capital Gains Tax changes on selling properties
3rd July 2019
3rd July 2019
We have regularly reported how the changes in tax legislation have impacted landlords over the last few years, and the government continued with this stance during the most recent budget announcement late last year with the removal of letting relief and a reduction of the deemed occupation period allowable under Principle Private Residence (PPR) relief (commencing in April 2020).
In a nutshell, if you sell a property (and especially if you own more than one property), you may have to pay more Capital Gains Tax (CGT).
If you were to sell an investment residential property, under the current rules, in instances where you have lived in the property at some point but not for the full duration of ownership, the last 18 months are currently considered to be automatically exempt. The Chancellor announced a proposed change in the final exemption period, reducing it from 18 months to 9 months.
A second proposed change involves second home owners who rent their property following a period of occupation before they decide to sell, counting on what’s called ‘letting relief’. This is a valuable relief that currently provides up to £40,000 of exemption (£80,000 for a couple) to people who let a property that had previously been their main residence.
Starting from April 2020, it is proposed that letting relief will only apply where the owner is sharing occupancy of the home with the tenant(s) under the same roof.
In conclusion, if you are considering selling an investment property, which was once your principle residence, then the capital gains tax is almost certainly going to increase, should you sell the property after 6 April 2020. A simple calculation could help decide whether it would be wise to sell the property earlier than planned.
By by Alex Chrysostomou
Alexander Associates, your local accountants
24A Aldermans Hill, Palmers Green, London N13 4PN Tel: 020 8882 6611 Fax: 020 8882 6621