Following on from the announcement of the Budget at the end of October, let’s dig a little further into the changes announced to Private Residence Relief (PRR).
From April 2020, the final period exemption when you sell a property you have previously lived in will be reduced by half. Under current rules, PRR allows the owner to exempt the years they lived in the property from their Capital Gains calculation upon sale, plus a further 18 months of exemption. The new rules have changed this final period exemption to 9 months, so for those who are considering selling a property they have previously lived in, this could have a considerable effect on the Capital Gains Tax they pay.
This is not the only change to arrive however - arguably more impactful are the changes to the rules for Letting Relief, which will now only apply to owner-occupiers. At present, Letting Relief can be worth as much as a £40,000 reduction in the chargeable gain to an owner selling a rental property that was previously their main residence - with no stipulation for the owner to occupy the property at the same time as their tenants. This will no longer be the case come April 2020. After this date the owner will need to live with their tenants in the property to qualify, effectively ending this relief for many owners.
The government has decided to the leave the PRR rules alone for those who are disabled or in a care home, which will remain at 36 months of final period exemption.
Topics
Archive
- 2024
- October 2024 (1)
- August 2024 (1)
- June 2024 (1)
- May 2024 (1)
- April 2024 (1)
- March 2024 (1)
- January 2024 (1)
- 2023
- December 2023 (2)
- November 2023 (2)
- September 2023 (2)
- August 2023 (1)
- July 2023 (3)
Comments for Autumn Budget: Changes to Private Residence Relief / Lettings Relief