Selling a Let Property

Many landlords are deciding to sell their residential properties.

From 6th April 2020, none of the interest and finance charges relating to those properties can be deducted from the rental income. Instead, the landlord receives a tax credit equal to 20% of the interest to set against their income tax bill.

Any gain you make from selling your residential property is taxed at 28% if you are a higher rate taxpayer, or at 18% if you are a basic rate taxpayer. However, you can deduct the following from the proceeds to calculate the taxable gain:

  • solicitor’s and estate agent’s fees paid on the sale and purchase;
  • cost of improvements you made to the property (as long as not claimed against rental income);
  • stamp duty land tax paid on purchase; and
  • your annual capital gains tax exemption in year of sale (currently £12,000 for 2019/20).

If the property was ever your main home for tax purposes you can also eliminate the proportion of the gain which relates to the period during which you occupied it as your home, plus the gain relating to the last 18 months of ownership.  As your former home was let you can also claim lettings relief which reduces the gain by up to £40,000.

Beware, if you sell  the property after 6th April 2020, the exempt gain for the last period of ownership is reduced to only 9 months and the lettings relief may be completely eliminated.

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