BEWARE – there is no Capital Gains Tax Roll-Over on BuyToLet

BEWARE – there is no Capital Gains Tax Roll-Over on BuyToLet

10:00 AM, 1st August 2012, About 10 years ago 12

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Following an email I received from a reader yesterday I feel compelled to write an article warning landlords of the tax implications of selling their assets due to there being no capital gains tax roll-over on BuyToLet properties.BEWARE - there is no Capital Gains Tax Roll-Over on BuyToLet

The email came from a gentleman whose mother is in her 70’s and is considering exit/succession strategies. Apparently she’s owned an HMO for 43 years and has repaid the mortgage. Their plan, until reading my article about partial exit strategies was to sell the property and to re-invest the money into properties which are easier to manage and don’t come with all the new legislation surrounding HMO’s. I can only imagine how much capital gains tax would be triggered on the disposal. The property is now worth £650,000. How much would a property like that have cost 43 years ago?

What’s worse is that if the money is reinvested into buying more BuyToLet properties there is no capital gains tax roll-over relief. If the properties were commercial premises such as offices, shops, warehouses, nursing homes etc. then CGT roll-over relief would be applicable, however, due to a quirk in tax law there is currently no Capital Gains Tax Roll-Over on BuyToLet residential property.

I have dropped them an email inviting them to call me but I’m sharing this story, without breaching any confidentiality of course, as it may well affect other peoples decisions.

As you will have seen from Neil Pattersons article yesterday, “ageism in BuyToLet mortgages doesn’t exist with all lenders. Therefore, it may well be possible for the HMO property to be remortgaged and for the mortgage interest to be offset against rental profits.

That’s doesn’t change the hassle factor of continued ownership of course, however, read THIS ARTICLE and you will see that this problem is easily solved too.

For this Mother and Son partnership there are several other reasons why they should consider such a strategy.

  1. Capital Gains Tax ceases to fall due on death. OK, so that’s a bummer of a way to get out of paying your taxes but it is a fact and can be used to good affect  in legacy planning.
  2. Any monies gifted to the son now will not form part of the mothers estate providing she survives for seven years.
  3. The value of the estate will be substantially reduced by raising a mortgage as the mortgage liability can be offset against the value of the asset.
  4. Gifted monies can be used to build a new property portfolio in the sons name
This article is provided for guidance only and does not constitute financial advice. I strongly recommend that you take advice from suitable qualified professionals with Professional Indemnity Insurance. If you would like me to introduce you to my own trusted contacts please drop me an email outlining your circumstances in as much detail as possible and include your contact details. My email address is


by Joe Bloggs

19:08 PM, 1st August 2012, About 10 years ago

i believe there is roll over relief on BTL if CPO'd.

by Mark Alexander

19:15 PM, 1st August 2012, About 10 years ago



8:18 AM, 2nd August 2012, About 10 years ago

That is correct - s247 of TCGA1992 provides relief for gains made by reason of a Compulsory Purchase Order. However, the BTL owner cannot have advertised the property elsewhere, nor can the new property be their dwelling (for a period of 6 years).


17:52 PM, 2nd August 2012, About 10 years ago

Is this a recent (last 5 years) change to the rules?

I recall my niece cantacting the tax man about selling one property and buying another, and the tax man said that no CGT was payable.

by Mark Alexander

18:40 PM, 2nd August 2012, About 10 years ago

Hi Mike, I hope your niece got that in writing as she may need it as a defence if she is investigated. Unless there were exceptional circumstances such as your niece living overseas for over five years she was definitely given misinformation


3:21 AM, 27th August 2012, About 10 years ago

If she has owned the property for 43 years, she bought it before March 1982. So no CGT.


6:05 AM, 27th August 2012, About 10 years ago

Sorry - I should have checked! CGT was re-based on 31 March 1982, so she would still have a liability. Apologies.

by Sue S

21:02 PM, 1st October 2014, About 8 years ago

Can you please tell me if this situation has changed since you wrote the article? Thanks.

by Mark Alexander

8:54 AM, 2nd October 2014, About 8 years ago

Reply to the comment left by "Sue S" at "01/10/2014 - 21:02":

There is still no CGT roll-over relief on residential properties which have been let, presumably that is the "situation" you are referring to?

by Sue S

15:51 PM, 5th October 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "02/10/2014 - 08:54":

Thank you, yes , you have understood my question, Mark. Is there any way around this problem such as setting up a company?

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