If a landlord no longer wants to hold a buy to let property and put it on the market, it is important to be aware of the capital gains tax implications on the changes that came into effect from 6 April 2020.

Is there any private residence relief?

If the property has been occupied as a main residence for a certain period of the ownership under the landlord, then there will be some private residence relief available.

The release will only be available in relation to the patio that where the property was occupied as a main residence and also for the final period. From 6 April 2020 this is defined as the last nine months of ownership, meaning it has been reduced from 18 months previously.

What is the curtailment of lettings relief?

Where disposal of the property takes place on or after 6 April 2020, lettings relief is only available if the landlord occupies the property with the tenant. This is relevant for example, when the tenant lets out a number of rooms in a landlord’s main residence.

What are no gain, no loss transfers?

The capital gains tax rule allows assets to be transferred between spouses and civil partners at a value which gives rise to neither again nor loss.

This can be useful to mitigate the capital gains tax liability, particularly where one partner has not used their annual exempt amount or pays their tax at a lower marginal rate. the optimal ownership shares will depend on individual circumstances. It is important to review how the property is owned prior to the sale of it.

Property gains and paying tax

Chargeable gains on residential property must be notified to HMRC within 30 days of the date of completion.

This can be done online, and capital gains tax due on the gain must be paid within the exact same time frame. Returns are only required where a gain arises; no return is needed if the property is sold at a loss.

Due to the coronavirus HMRC have announced that they will not charge a penalty for transactions completed on or after 6 April and 1 July reported up to 31 July 2020 which are reported outside the 30-day time frame.

There will be a late filing penalty for transactions which are completed on or after 1 July 2020 if they are not reported within 30 days.

In addition, Interest is also charged when tax is paid late. This applies when the completion date is on or after 6 April 2020, coronavirus has brought no relaxation rules.

When working out the capital gains tax on residential property gains the annual exempt amount should be taken into account at all times, As well as any allowable losses which can be brought forward or realised prior to disposal. Losses arising after the disposal can’t be taken into account, even if they all realised within the 30 day window for filing the return and making the payments.

When filing the self-assessment return The taxpayers overall capital gains tax position is revealed.

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Any questions?

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