Autumn Budget 2018: Private Residence Relief and Lettings Relief restricted

The Budget proposes restrictions on two very popular tax reliefs for taxpayers on the sale of a property which was at some point their main home.

From April 2020, only the last nine months of ownership will keep the private residence exemption after the house has been vacated. Until recently the relief, known as the final period exemption, allowed the last 36 months to be exempt, helping those having difficulty selling. The 36 month period was then reduced to 18 months, and now this further reduction to 9 months will mean more homeowners will pay Capital Gains Tax when selling a property that used to be their home.

There will be no changes to the 36 months final period exemption available to disabled people or those in a care home.

Lettings relief will be reformed so that it only applies in circumstances where the owner of the property lets rooms while still living in the property themselves. This is a valuable relief in addition to the Private Residence Relief and allowed up to £40,000 of capital gain to be tax free when the ex-home is let before being sold.

If you own a property that used to be your home, then you may want to consider selling before the new rules come in and avoid a potentially larger Capital Gains Tax bill.

If you think you may be affected by the proposed changes and would like to discuss your individual circumstances, please contact us.

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