There is some interesting draft legislation detailed today, relating to Capital Gains Tax(CGT) on properties.
Where someone has lived in a property at some point as their main residence then regardless of actual conditions, the last 3 years of ownership were treated as being exempt for CGT.
This was particularly useful for people who had started letting out their main property, or had at some point lived in a second property as their main residence.
However the draft legislation published today proposes that this 36 month exemption be reduced to 18 months.
With the increasing number of rental properties, this has the potential to affect quite a few people.
It is planned to come into force for contracts that are exchanged from 6th April 2014, and some reports have predicted that this could result in an effect on the property market as people rush to sell properties before the cut-off date.
With a period of rising prices, suddenly having to pay CGT on 18 months worth of gain could be an extra burden that hasn’t been planned for.
However, it is always worth speaking to a professional to prepare detailed CGT computations if you are considering a sale – there may also be letting relief that can be claimed, as well as other expenses that are allowable.
If you know someone considering selling a property within the next year, please do put them in touch.