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The recent CGT changes will see the introduction of a flat rate 18% CGT
(as from April). Previously, the rate of CGT was at the highest rate that a
person paid income tax on, so a top-rate taxpayer could have paid 40%.
This is, of course, good news for second-home owners who have to pay
CGT when they sell the second residence.
Most owners will know about the principal private residence exemption.
However, there is a further and less well-known exemption in respect of
residential lettings. If a person moves out of all or part of their main
residence and lets it as residential accommodation, then an exemption
of up to £40,000 may arise in respect of the gain attributable to the
period of the letting (and where there are joint owners each will be
entitled to this exemption on top of their individual exemptions –
currently £9,200). Note, however, that this lettings exemption does not
apply to a property purchased solely for letting. © Practical Lawyer
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March 2008 |
