Landlords are being advised to value their properties now to minimise the amount of CGT they may be subject to.
The buy-to-let sector has been a booming investment for many in the UK, thanks to strong tenant demand, low supply and favourable mortgage rates. For expats overseas, too, becoming a landlord can be a handy source of income, as well as method of retaining a Sterling-based asset.
Changing rules on Capital Gains Tax for the 2015-16 tax year, though, could see sellers face a bigger bill than expected.
“As of 6th April, capital gains tax will be levied on non-UK residents who dispose of UK residential property, including trustees, certain companies and personal representatives,” explains Elaine Ferguson, Head of Customer Service at OverseasGuidesCompany.com.
“Thanks to the new charge only being applicable to gains accruing after 6th April 2015, there is a way non-resident owners can minimise how much CGT they are liable for, which is to get an official valuation of their property now,” she continues.
“Not doing so could mean capital gain is calculated as a portion of the total gain accrued during the whole period of ownership, potentially making the tax bill much higher. Alternatively, another option when selling could be to try to obtain a retrospective valuation, but this would be a more complex, time-consuming and costly option. Under the new CGT charge, the rates for individuals will be either 18 per cent or 28 per cent, according to their status as basic or higher/additional rate taxpayers respectively.”
“We always recommend speaking to a tax advisor who specialises in helping expats or those on the verge of moving overseas, as taking preventative measures early on can save money later on down the line,” she adds.