Did you know that Changes to capital gains tax (CGT) came into effect in April 2020? How does this affect you and your property?
CGT is paid on profits made through the sale of any property that isn’t your main home, so this tax affects the sales of most second properties. It is the profit made that is taxed, not the entire amount. The changes will affect the timescale for payment and the tax relief you can claim. Previously, if you once lived in the home you now let out, you were eligible for ‘lettings relief’. This means that you didn’t pay tax for the years you lived at the property, plus the last 18 months you owned the property (regardless of whether you lived there or not during this time).
From April 2020 this was abolished – and landlords are now only be able to claim lettings relief if they share the property with their tenant.
It also limits the ‘final exemption period’ from 18 months to nine.
Also, from April 2020, landlords now need to pay the full amount of CGT owed on a sale within 30 days, whereas previously they had until the following tax year.