Buy to let properties which are not furnished holiday lets, for which special rules apply, qualify for Non Business Asset taper relief.
This accumulates over a period of up to ten years to a maximum of 40%. A property must be held for three years before any relief is available. After three years a 5% deduction is available, this increases by 5% each year thereafter up to a maximum rate of 40%.
It is quite common for rental properties to have been an individual’s main home or ‘Principle Private Residence’ (PPR). Where this is the case, the period during which the property was their only or main home will be exempt from tax, as will the final three years of ownership, regardless of whether the property was let during this final period. In addition, a further ‘private letting relief’ will be available on a property which has been your PPR.
The relief available is the lower of:
- The gain exempted under PPR relief
- The gain arising as a consequence of letting
- £40,000
Please contact us for further assistance as capital gains tax allowances are under review.