The property tax shakeup

As we look forward to the year ahead, it’s worth considering some big tax changes planned for residential property in 2020.

Capital Gains Tax on your home and other residential property

Currently, the last 18-months of owning your main home is exempt from Capital Gains Tax (CGT) even if you did not live there in that period, provided you had genuinely lived there at some point before. After 5 April 2020 this qualifying period is set to halve to nine months.

This means that if you buy, or have recently bought, a second residence as your new home, you will have nine months in which to sell your original home before you run into CGT issues. In a slow- moving property market, the impact of this change could be significant, as it will affect new transactions, as well as those predating the change.

In addition, the CGT reporting regime for residential property sales is speeding up. Currently, if you sell a chargeable property in any given tax year, you don’t have to disclose and pay any CGT until 31 January after the tax year end. However, where CGT is due from 6 April 2020, it will need to be declared and paid within 30 days of completion. Sellers need to be alert to this and plan accordingly, as penalties will apply to late payments.

Lettings relief

At the same time, the qualifying criteria for lettings relief is being tightened. Currently, if you let out your main residence, you could qualify for lettings relief of up to £40,000 per individual, or £80,000 per couple. However, after 5 April 2020, this relief is set to only apply where an owner is in shared occupation with their lodger/s. The result is that lettings relief will disappear for most landlords who are eligible for it now.

To discuss the implications of any of these changes, please contact Jon Miles on 01225 325580 or email