Second home owners, landlords and property investors are warned of a ‘dramatic change’ to the current Capital Gains Tax regime which will come into effect next April.
The new rules mean that anyone selling a property after April 6, 2020, where CGT is due will have to pay the tax on any gain within 30 days of completion.
At the moment, the CGT deadline is January 31, following the end of the year in which the sale was made.
The change will not affect sales of a main or sole residence where no CGT is due, but will affect buy-to-let investors and owners of holiday homes – plus others who may find themselves ‘accidental’ owners of a second property.
Hilesh Chavda, a legal tax specialist in Royds Withy King’s private wealth team, is urging owners of more than one property to carefully consider the impact that this might have.
He said: “The change could mean that sellers have to get funds in place to cover the CGT liability before the sale is completed as 30 days is not very long at all. This could be a particular issue where there are large historic gains.
“Landlords, investors and second home owners thinking of selling one or more properties in the next couple of years are well advised to get professional advice at an early stage to make sure they understand and can meet their liabilities.
“This will no doubt impact cash flow so it will be interesting to see what effect this has on the residential property market. This is particularly true where sellers are also buying and have to pay Stamp Duty Land Tax within 30 days of competition.
“Many may well be tempted to offload any surplus or under-performing properties in advance of next April, but whether they can do this successfully or not in today’s suppressed market remains to be seen.”