Landlords: Thinking of selling? Read this first…

Posted on: Category: Landlord News, Taxation

Written by: Mike Booth, Partner at Hanley & Co. Chartered Accountants

Proposed changes to capital gains taxation announced in the Chancellor’s most recent budget could make a huge difference to landlords who are looking to sell a rental property.

Landlords who are renting out a property that they have previously lived in as their principal private residence (PPR) may have more capital gains tax to pay if they sell the property on or after the 6th April 2020.

Here’s an example to illustrate the impact of the proposed changes:

Mr & Mrs Jones have jointly owned a property for 30 years, which was their principal private residence for the first 15 years of ownership and then rented it out for the remaining 15 years.The profit on the sale after legal and selling fees will be £240,000.Mr & Mrs Jones have other income of £50,000 each in the year of the sale, which means that they are both higher rate tax payers and that the capital gains tax is paid at 28% rather than 18% if they had no other income.

There are 2 proposed rule changes:

  • the removal of the £40k lettings relief per owner
  • a reduction from 18 months to 9 months for the tax free final period

So based on this example, the letting relief goes from £80k to zero, and the tax free final period is reduces from 198 months (i.e. 15years + 18 months) to 189 months (15 years + 9 months).

Sold before
6th April 2020

Sold on or after 6th April 2020




Principal Private Residence:

  • 198/360 months
  • 189/360 months





Minus lettings relief £40k x 2 owners





Minus annual exemption x 2 owners



Chargeable gain



Capital gains tax payable at 28%



It’s worth remembering that at this time, these changes are only proposed and are being put out to consultation. Therefore, it is possible that the final changes could be different to the current proposal. However, it is advisable that landlords are made aware of these proposals now to see how they may be affected because, if they are implemented, there may be very little time to react.

So if you are thinking of selling a rental property that you previously lived in, now is the time to get some professional tax advice from a chartered accountant.

Hanley & Co. already works with a number of landlords, and provides an initial meeting for free.For more information, please contact us on 01539 821 869 or by email –