Warning of huge CGT burden on landlords
A rental portal has calculated that some landlords will be obliged to pay up to £54,000 in Capital Gains Tax from April 2014.
Currently the last three years of a rented property’s capital growth is exempt from tax when the property is sold, so long as the landlord once lived in it. But after April this exemption period will be halved to just 18 months.
The extra tax landlords will have to pay depends on the increase in value of the property and the time they spent living in it, but portal Rentonomy.com warns these changes would particularly affect high-rent locations such as London.
“In Kensington prices have risen by 171 per cent in the last decade, meaning that come April a seller would have to pay an extra £54,000 in capital gains tax per property” according to the portal’s research director, David Butler.
The measure, introduced by Chancellor George Osborne in last month’s Autumn Statement, was widely regarded as an ‘oligarch tax’ aimed to hit high-end overseas owners. But it effects small-scale investors and ‘accidental landlords’ who may have rented out their homes during the downturn.
Independent analysts say the government should secure an extra £360m between 2015 and 2019 from landlords who sell up.
Article courtesy of Letting Agent Today