Are you someone who has had to relocate for work? Or maybe you separated from your partner and moved in with someone else? In either case, it may be that you didn't sell your property immediately – or couldn't find someone to buy it – so chose to rent it out instead.
From April 2020, there are some changes to regulations which might well have an impact on your tax position. So, if you were thinking of selling your property you might want to accelerate the process to complete ahead of the deadline?
In a move announced by Chancellor Philip Hammond in 2018 (and described by The Guardiannewspaper as seemingly 'technical and esoteric'), the ground was laid for a significant tax grab.
There are two Capital Gains Tax (CGT) issues to consider.
The first is to do with the amount of the gain covered by private residence relief. No CGT is due for the years you lived in the property yourself and there is a further exemption for the final year and a half that you owned it – regardless of whether you were there or not. From next April, that exemption period will be slashed to nine months.
The second change is connected to lettings relief. As an individual, you can currently get upto £40,000 of relief for a property that is – or was previously – your main home. The figure is upto £80,000 for a couple. From the 2020/1 tax year, this will only apply if you are sharing a home with a tenant and therefore in practice this relief is unlikely to be available to landlords.
Potentially both of these changes could leave landlords significantly out of pocket.
It's possible to see examples of how this works on the HMRC website.
If you're likely to be affected and wish to clarify your position please contact David Richardson by email dmr@markjrees.co.uk