Changes in Capital Gain Tax - BTL Property Investors need to act now
From April, the 5th new changes in Capital Gain Tax were implemented. For years CGT did not apply to overseas owners of residential properties in the UK. Investors and landlords were able to enjoy the freedom to sell property without any serious CGT implied. However this is no longer applicable,
From April 2015 CGT rules has been changed. Those living abroad are now subject to the same taxes as UK residents with gains in property value now taxes for all residential property sales.
It possibly does not sound so important now if you think that no property sale is planned in the near future but it is important to prepare for this change while you have a unique opportunity to significantly reduce future exposure to this tax.
While there is no way to legally avoid this tax, HMRC is currently offering a chance to mitigate some of the damage to investment returns by deciding to apply the tax to gains from April 2015 only. If you have an official valuation made now, you will be able to reduce the potential amount by only paying for increased value from April 6th, and avoiding tax on asset value increase prior to this date. By not having valued your property, you simply offer HMRC to tax gains on your property from purchase date. Depending on when the property was bought, this can prove to be very costly.
A simple example - say you bought a property for £300,000 in 2010. By April 2015 its value increased to £400,000 and in 2017 you decided to sell it for £500,000. If you have your valuation done now, you will be taxed on £100,000 only but without valuation CGT will be applied to the whole £200,000 increase.
Act now! Domovoi can arrange an official valuation of your property done by a certified surveyor.