We recently wrote a new item on the challenges that landlords are currently facing. Unfortunately, there may also be worse to come in the shape of changes to principal private residence relief.
In the recent budget HMRC announced two changes to the relief. Firstly, the period of deemed occupation at the end of ownership, which is designed to prevent people being penalised for a delayed sale will be reduced from 18 months to 9 months. Secondly there is likely to be a change to the valuable lettings relief from 2020.
Whilst we await full details, it may become possible that even short periods of letting a main residence will create a capital gains tax liability if the property is subsequently sold. This may affect someone who leaves their residence for a period of work abroad and lets the property out for example, or someone who rents out their home for a few weeks of the year each summer. We will keep an eye on any developments in this area. However, if you have a property which you have had as your main home and have let out for a period, which you intend to sell, there may be a substantial tax saving in ensuring that sale takes place before April 2020.
Please get in touch with your usual CB Reid contact if you wish to discuss this, a potential off plan purchase or any of the tax changes for landlords in more detail.