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Property Tax Onslaught Continues

Onslaught against buy to let landlords

The Tory onslaught against buy to let landlords carries on with changes to the tax landlords pay on profits when selling a rented home.

The controversial income tax on profits stays – slashing mortgage interest relief – together with the 3% surcharge on stamp duty for additional homes worth more than £40,000.

Now, Chancellor Phillip Hammond is attacking the profits landlords make on selling a buy to let property by changing capital gains tax rules.

Principle Residence Relief became the first CGT casualty.

Instead of an 18-month tax-free period added into the CGT calculation, the time is cut in half – to nine months.

Lettings relief scrapped

Next, he scrapped lettings relief for any landlord who did share the home they sold with a tenant.

Currently, landlords who lived in the letting property they are selling as their main home at some time during their ownership can claim a minimum of a £40,000 reduction in their selling profits to reduce their CGT bill.

Both changes take effect from April 6, 2020.

“We re-commit today to keeping family homes out of Capital Gains Tax. But some aspects of Private Residence Relief extend it beyond that objective and provide relief for people who are not using the home as their main residence,” said the Chancellor.

“So from April 2020 we will limit Lettings Relief to properties where the owner is in shared occupancy with the tenant, and reduce the final period exemption from 18 months to nine months.”

CGT tax breaks

Another capital gains tax break changes for all taxpayers.

The annual exempt amount, which is the tax-free gain which can be earned before triggering CGT, raises from £11,700 to £12,000 from April 6, 2019.

Expats or non-resident owners who dispose of a UK residential property are liable to CGT and, in most cases, can claim the annual exempt amount in the same way as UK residents.

Changes to income tax thresholds also benefit CGT payers – the top banding for paying CGT at 18% increases from £46,350 to £50,000 from April 6, 2019, and will then rise in line with inflation each year.

For gains that take taxpayers over £50,000, the CGT rate goes up to 28%.

Source; Lisa Smith

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