Information supplied with thanks to
Stewart & Co. Accountants-Camberley..
As we are almost halfway through this tax year, we believe now would be an ideal opportunity to provide an update on some crucial changes to tax reliefs that will apply from 6 April 2020 when you sell a residential property.
If you are, or have been, thinking about disposing of a property you may wish to read below some key points.
• If you have let a property which you have at any time, lived in as your main home, you would currently be eligible for lettings relief up to £40k on the disposal of that property (potentially £80k for a married couple). From 6 April 2020, the majority of our clients will no longer qualify for this generous relief as you now need to have lived in the property at the same time as your tenants to qualify. For a married couple paying tax at the higher rates, the loss of this relief could result in additional taxes of up to £22,400.
• Principle private residence relief can be claimed in respect of a property that was, at one time, your main home. The final 18 months of ownership currently qualifies for the relief whether you were living in the property at that time or not. This will be reduced to 9 months from 6 April 2020.
• From 6 April 2020, if you dispose of a residential property you will now need to pay any capital gains tax arising as a result of that sale within 30 days of the completion date. If the date is before 6 April 2020, you wouldn’t need to pay the taxes until 31 January 2021.
As you can see, acting now so that any chargeable event occurs before 6 April 2020, depending on your circumstances, could save you a considerable sum of capital gains tax and/or ensure you have longer to pay those taxes!
Provided courtesy of Stewart & Co. Camberley