This week the BBC reported on a RICS release indicating a trend amongst private buy let landlords selling properties, and the pressures applied to the rental market in consequence.
Rising interest rates and unattractive mortgage offers were cited amongst the factors fuelling this apparent tendency. A few years ago a private landlord’s mortgage interest cost was enjoying full income tax relief, softening the blow of that increased cost.
That’s no longer the case for most private landlords, meaning a difference between their taxable rental profits and their cash receipts and payments. For those who are highly geared there could easily be an economic loss in cash inflow/outflow terms, but an accounting profit on which income tax needs to be paid.
Where landlords take the decision to sell, it is important they remember the obligation for taxable capital gains on UK residential property to be reported to HMRC within 60 days of sale, payment of the associated tax falling due on that same 60 day deadline.
We have a simple flyer to show which disposals oblige this 60 day reporting and which are exempt, here.
Most conveyancing lawyers seem to have got the memo, and so awareness and compliance with the regime currently feels like it’s pretty good. But we still encounter clients who have sold property in ignorance of the rules leading to late returns, complete with late filing penalties and late payment interest.
Like the mortgage companies, HMRC’s interest rates are rising fast and so making your tax payment late can result in a noticeable increase in balance payable.
The next step
Should you like to discuss the sale of a UK residential property please contact Graham Boar at our Letchworth office or your usual UHY contact.