More landlords and owners of second homes could have to pay capital gains tax on the sale of their additional property from April 2020, following a change to private residence relief.
Private residence relief allows people to sell their main residence without incurring a capital gains tax charge.
It covers the time spent living in the property, plus an additional period of relief known as the final period exemption.
Changes to the relief, which were announced in Budget 2018 and confirmed in Finance Bill 2019/20, will reduce the final period exemption from 18 months to 9 months from 6 April 2020.
Brian Slater, chair of the property taxes sub-committee at the Chartered Institute of Taxation, said:
“Many homeowners are still unaware that the final period exemption was reduced from 36 months to 18 months in 2014.
“A further reduction to just nine months is likely to bring more property disposals within the scope of capital gains tax.
“While the average time to sell a property is around four-and-a-half months, there will be many exceptions due to regional variations, separation and divorce, and other complexities.”
Speak to us about the tax implications of selling your property.