If you are planning to sell your main home, a holiday home, or an investment property, you need to be aware of the rule changes around the corner.
When you sell your own home the gain is tax-free for the periods you lived in the property. If you move out before the property is sold, the gain for that final empty period is also tax-free, as long as that is no longer than 18 months. For sales from 6 April 2020, that final tax-exempt period will be limited to nine months, with an exception for owners who have moved into residential care or are disabled, when the final 36 months of gain is exempt.
The gain made on selling an investment property will normally be fully taxable at 28%, if you are a higher rate taxpayer, or at 18% for a basic-rate taxpayer. However, where that property was once your main home, the gain relating to the time you lived there will be exempt, plus the last 18 months, reducing to nine months for sales from April 2020.
There is also an exemption for letting a former home, which can amount to up to £40,000 per owner. But beware; for sales from April 2020, that letting exemption will only apply to periods when the property owners were also in occupation. This will effectively wipe out lettings relief for sales of investment properties made on and after 6 April 2020.
When a share in the main home is transferred between husband and wife, or between civil partners, there is no tax payable on that transfer. The recipient also inherits the tax history of the property, as if they had owned their share for the same period as their spouse. This generous tax treatment will change from 6 April 2020, which may disadvantage some couples.
Please talk to us before you sell your property so we can work out the likely tax due in advance.