Homing in on capital gains
Post by Mearns & Company in News
Draft legislation confirms a further 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 land 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 capital gains tax (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.
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.