Potential Budget CGT relief and profit split for selling to long term tenants?

Potential Budget CGT relief and profit split for selling to long term tenants?

9:18 AM, 8th October 2018, About 3 years ago 38

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On Friday we reported on the RLA Press release RLA ask for longer term tenancy tax incentive

However, over the weekend the Sunday Times has reported that government may consider adding an incentive to Landlords for selling to their long term tenants in the Budget on 29th October.

The Article said: “Under plans that have found favour in Downing Street, landlords would not pay capital gains tax when selling to tenants who have lived in a property for three years or more.

“The plan is designed to spur landlords to offer longer tenancies and then to sell on to a new generation of homeowners. Conservatives say a plan could be unveiled their think tank, “Onward” and is under consideration for inclusion in the Budget”

Potentially landlords would be eligible for CGT tax relief with the profit split equally with the tenant, who could use it as part of their mortgage deposit.

News from the Onward Website, Click Here to view, said:

“A new policy paper on the private rented sector in England, argues for a new route to ownership for private renters and greater incentives for landlords to offer long-term tenancies.

“The paper argues that Ministers should give Britain’s private renters a new Chance to Buy their rented home by rewarding landlords who sell to long-term tenants.

Onward’s  3 proposals:

  • Existing buy-to-let properties would be eligible for 100% capital gains tax relief if the property is sold to a sitting tenant who has lived there for 3 years or more.
  • The gain from this tax relief would be split evenly between the landlord and the tenant, giving the landlord a windfall when they sell and the tenant thousands of pounds towards their mortgage deposit.
  • Onward proposes that the Treasury should pay for this policy by tightening other tax reliefs for buy-to-let investors, including reducing the Private Residence Relief period from 18 months to 6 months and abolishing Lettings Relief of up to £40,000.

Therefore, for Landlords there will be some element of giving in one hand but taking from another.



Comments

by Joey

20:29 PM, 10th October 2018, About 3 years ago

Reply to the comment left by Joey at 10/10/2018 - 20:20
So the taxman allows us 100% CGT PROVIDING - we split the profit 50 / 50 with the tenant !!! -

- then surely the following will be the better option : -

2 X £11,700 IE for a couple CGT relief each + money spent on the property deducted, then pay 28% on the profit made is the better option - Am I seeing this correctly ? ? ?

by Rob Crawford

4:27 AM, 11th October 2018, About 3 years ago

Reply to the comment left by Joey at 10/10/2018 - 20:29Hi Joey, this is a good question but from info released thus far, it doesn't go into this detail. If you calculation is correct, I can see it being an attractive option to owner couples wishing to sell a single property annually. What is also unknown is how it all works. At present CGT is calculated / awarded(!) on the following years tax return. So who takes the risk of getting this wrong?

by Joey

9:30 AM, 11th October 2018, About 3 years ago

Reply to the comment left by Rob Crawford at 11/10/2018 - 04:27
Thx Rob

by Rob Crawford

1:54 AM, 12th October 2018, About 3 years ago

Reply to the comment left by Joey at 11/10/2018 - 09:30
...your second calculation being the only acceptable option in my mind!

by V view

9:21 AM, 12th October 2018, About 3 years ago

The government are now beginning to genuinely panic about general election results. They are desperately trying to win votes from other parties, of which they really are unlikely to achieve as those voters they are trying to appeal too will never vote Tory under any circumstances. However they seem to be unaware that they are seriously alienating their core group of voters with these perpetual raids on peoples personal wealth.
If they carry on like this (which unfortunately I think they will) they are going to find themselves in a very deep hole come election time, which could be coming sooner than either we or even they realise.

by Luke P

9:42 AM, 12th October 2018, About 3 years ago

Reply to the comment left by at 12/10/2018 - 09:21
So our choices are: vote for more of the same (and perhaps some of the as-yet unknown), or...Jeremy Corbyn and his 'vision'.

Great.

by Stephanie Pooley

9:32 AM, 13th October 2018, About 3 years ago

Reply to the comment left by Luke P at 12/10/2018 - 09:42
Really hoping someone sees the light and stops section 24 and does something else instead them

by Glenn Ackroyd

10:02 AM, 13th October 2018, About 3 years ago

If anyone has a plan to sell in the near term and has a portfolio, I'd recommend a consultation with Mark Alexander. I did and was sceptical TBH.

But based on his advise, I've transferred into a Ltd co, with no SDLT to pay on transfer, no CGT on transfer, and have now agreed on a sale. I've got no CGT to pay at all.

by David Nic

10:43 AM, 13th October 2018, About 3 years ago

Why don't the gov't widen this policy so any renter of 3 years can buy any house that is up for sale by choice from any landlord. The sales market is full of ex rented properties for sale from exiting landlords but the only buyers are other investors as 1st time buyers are forced to head for an overpriced help to buy new build because of gov't handouts and putting them in negative equity from day one.
I'm not a fan of this policy but at least give the renters some choice and the landlords that want to sell then can.

by Mark Alexander

12:33 PM, 13th October 2018, About 3 years ago

Reply to the comment left by David Nic at 13/10/2018 - 10:43
I like your thinking!


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