Homing in on capital gains
Draft legislation confirms tightening of the rules on capital gains tax and your home.
The government has been reforming the tax system to make investment in residential property less attractive. Actions have included increasing stamp duty nd tax (mirrored in Scotland and Wales), reducing tax relief for mortgage interest and, from next tax year, creating a 30-day time limit for paying CGT on any residential property sale profits. There will be two further new changes
from April next year:
■ A reduction in the ‘final period exemption’. This is the period in which no CGT applies to a former main residence, and it will be halved to nine months in most circumstances – a problem if you buy your new home before selling your old one.
■ Letting relief, which exempts up to £40,000 of gain from tax, will only be available if the owner remains in shared occupancy with the tenant. So it won’t apply where the owner moves out.
The government’s explanatory note says that “These changes are intended to make private residence relief fairer and…better targets…reliefs at owner occupiers, in line with broader tax strategy to promote home ownership”.
If you are thinking of moving home but retaining your current property, both measures provide food for thought.
The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.
The information in this article does not constitute advice and should be used for informational purposes only. This content has been provided to Helm Godfrey by Taxbriefs.