×


Home About Contribute Media Kit Contact Sign In
×







.


Property Industry News

Letting out a property that was once your own home? It may be beneficial to sell before new tax rules take effect


Exchanging contracts to sell before the 6 April 2020 deadline could provide significant savings on your tax bill

Letting out a property that was once your own home? It may be beneficial to sell before new tax rules take effect


"It is often a difficult decision as to when it is the right time to dispose of an investment property, particularly as there may be other complex tax issues that need to be considered"
John McCaffery, Partner Alexander and Co



If you let out a property that was once your only or main residence and are considering disposing of this asset at some point in the future, it may be prudent to consider doing so before April 2020. This is because two generous tax reliefs are changing, one being withdrawn completely, the other cut in half.

Private Residence Relief (PRR), which allows an additional grace period of the last 18 months of ownership is being halved to nine months, whilst Lettings Relief is being withdrawn completely. If your property has increased in value since purchase, this could have a huge impact on your capital gains tax bill if you sell the property after 5 April 2020.

John McCaffery, Partner at chartered accountants Alexander & Co, explains “Currently, when you let a home that was once your main residence, Private Residence Relief is available for the amount of time you lived in it, together with an 18 month grace period up to when you sold it, regardless of whether you lived in the property during this period or not, even if it was rented out during this time.

“This means that if the value of your property have increased since you purchased it, you only pay capital gains on the remainder of the time, as percentage of the increase in value, less any tax allowable purchase and disposal costs (such as stamp duty, conveyancing fees and legal fees).

“More critically, Lettings Relief, which can be up to £40,000, per person, per property, is being withdrawn from April 2020. These two changes could mean that you could be liable for a considerable tax bill if you do not exchange contracts on a property before the end of the tax year (for tax purposes it is the date of exchange, not completion that is the key date to determine when a property is sold). Under the current arrangements, even a considerable increase in a properties value could result in a nil capital gains tax bill once these two allowances have been factored in.”

Exceptions to the changes are the 36-month period that PRR is available for disabled persons, or those in a care home, which will remain. Lettings Relief will only be available where the owner of the property is in shared accommodation with a tenant.

It is often a difficult decision as to when it is the right time to dispose of an investment property, particularly as there may be other complex tax issues that need to be considered.

The specialist property team at Alexander & Co can provide expert advice on all aspects of property accountancy and tax. It has knowledge and expertise in a wide range of investments and have worked with companies, entrepreneurs, individuals, trusts and organisations in the commercial and residential sectors for many years. You can contact us directly on 0161 832 4841, email info@alexander.co.uk or visit our website at www.alexander.co.uk

.


Property Business News - Although asbestos can severely damage our lungs if inhaled, it was a common substance used between the 1950s 80s due to the many structural advantages it gave. These include its excellent tensile strength, resistance to chemical attacks, and its inability to conduct heat.


Tackling Asbestos The 3 Most Common Hazards

Property Business News - New housebuilder to the region, House by Urban Splash, appoints two new and experienced members to its team to deliver their major development called Inholm, at Northstowe. The hires are made as part of their ongoing commitment to creating the brand new neighbourhood of 406 homes built by Modern Methods of Construction MMC .


Local new hires for ground-breaking modular homes team at Northstowe

Property Business News - Plans have been revealed for one of Southport s most prominent buildings with the new owner of The Cloisters promising to spend more than a million pounds redeveloping it. The 6,000 sq ft, two-storey former Victorian school on Corporation Street is subdivided into two units and has a large rooftop terrace that was once a playground.


£1m plan to redevelop former Merseyside school will create 75 jobs

Property Business News - They include a show village of seven properties at Woodford Garden Village, in Woodford, near Stockport, plus four fully furnished show homes at King s Moat Garden Village, in Chester.


Housebuilder pushes forward with raft of launches

Property Business News - 5-star housebuilder, Miller Homes, has recently welcomed their latest Development Sales Manager to the team. Frankie Healey, who joins Miller from Story Homes following a 4-year employment at the company.


Miller Homes Appoints New Development Sales Manager

Property Business News - Jacqui Woodall will lead a team of eight six duty managers, a housekeeper and a maintenance technician at The Folds in Romiley and Aimee Clayton pictured above will also head up a team of eight at The Cottons in Ramsbottom.


Two senior hires for Adlington Management Services