Half a million landlords impacted by changes to capital gains tax


New rules for capital gains tax means that some landlords could see their costs increase significantly when they come to sell their former homes.

Landlords who previously lived in a property but then let it out can currently claim capital gains tax relief on the property for up to 18 months after they have moved out. From April 2020 this relief drops to just nine months, which could affect up to half a million landlords.

The tax break was originally introduced to help accidental landlords – those who had to move for work, for example, and were unable to sell their home or chose to rent. It stood at 36 months until 2014 when it was reduced to 18 months.

Capital gains tax on second properties

Capital gains is a tax charged on the profit made on an investment property when it is sold. Landlords expect to be taxed on the difference between the price the property was purchased for and the price it sold at. For landlords that rent a property that was once their main home, capital gains tax applies on the amount the property increased in value when they weren’t living in it.

Under the current rules, a landlord that has owned a property for 13 years and lived in it for six would only be taxed on five years and six months of gains; from April 2020 they will be liable for taxation on six years and three months.

Gordon Andrews, tax and financial planning expert at Quilter, said: “The government expects to net an additional £470m over the next five years in additional tax revenues as a result of this change. It means that owning a second home becomes slightly less profitable for those that rent out a property they previously lived in.”

Month of change

The rule change means that holding onto a property when you move home in the hope to benefit from rising house prices later down the line, will be less attractive to some. However, married couples will see a benefit as a spouse or  civil partner can now inherit the relief. Previously they would not have been entitled to the relief unless they had personally lived in the property.

April 2020 is a month of change for landlords that previously lived in their rental properties long-term as the government scales back lettings relief. Currently £40,000 of their gain is exempt from capital gains tax when they sell their former home after renting it out, for couples it’s £80,000. However, from April 2020 only landlords that have lived in the property with their tenants will qualify for this benefit.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800


Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator


Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.


Not a member? Sign up for free


Half a million landlords impacted by changes to capital gains tax


By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.