2020 Tax Changes Accelerate Sell-Off
2020 Tax Changes which reach their full impact in the next 12 months could fuel property changing hands between landlords.
That’s the view of Andrew Turner, chief executive at specialist lender Commercial Trust.
He says that the abolition of lettings tax relief from April 2020, almost exactly a year from now, could impact on ‘accidental landlords’ who once lived in a property and then decided to let it.
The sale of a former residence which has latterly been let out, may be liable to CGT if it is worth more at sale than when purchased. Until April 2020, up to £40,000 of letting relief may apply and is currently worth up to £11,200 of CGT savings.
After 2020 Tax Changes, this lettings relief is being withdrawn, except to those who occupy the property with a tenant.
Turner says this could prompt those landlords affected, who had plans to sell in the next couple of years, to do so before the April 2020 deadline.
“Tax is of course complicated. It is vital not to make a knee-jerk decision, prior to consulting with a tax professional, because the financial implications may or may not be significant” he says.
Turner adds that other CGT process changes may also hit the private rental sector.
At present, landlords who sell a rental property and make a capital gain, have until January 31st in the year after the tax year they made the sale, in which to pay their bill.
So, for example, if an individual made a taxable capital gain from a property sale in May of 2018, they would not have to pay this tax liability until January 31 2020.
However, from April 2020 a CGT bill on the sale of a residential property by a landlord will have to be settled within 30 days of the completion of the disposal.
“The clock is ticking and at the time of writing, there are just over twelve months until the above changes in CGT. Landlords need to be aware of how these changes could affect them and if in any doubt, speak to a tax specialist” concludes Turner.
Blog Post from Letting Agent Today
If you have any comments, please email the author of this article and click on the link above