Changes to Main Residence Relief and Lettings Relief
Are you selling your main home for more than you paid for it? If so, the ‘main residence relief’ rules generally mean that you don’t have to pay Capital Gains Tax (‘CGT’) on this increase in value. Good news for those living in a property which they own. These rules also allow for a period of deemed occupancy to qualify for relief in the 18 months (previously 36 months) up to the date of sale.
Should you let out your property, a period of letting may also qualify for relief under the ‘lettings relief’ rules. Depending on the circumstances, lettings relief can be as much as £80,000 for a property owned by a couple.
The Chancellor announced two changes in the Budget 2018 to take effect from April 2020:
- The final period exemption will be reduced from 18 months to 9 months. Although there are no proposed changes to the 36 months currently available to disabled persons or those in care homes.
- Lettings relief will only be available in circumstances where the owner is in ‘shared occupancy’ with a tenant.
The Government will consult on the detail of both these changes.
If you are considering selling your home and have let the property during a period of non-occupation, it may be worth considering a sale before 5 April 2020.
To find out more about how the proposed changes may affect you, please contact Vikki Logan, Tax Manager (Senior Associate) on 01892 506027 or at email@example.com.