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Some landlords can still benefit from lower tax rates Posted On 26 March 2024

Capital Gains Tax charged on residential property sales that is not your main residence has been cut from 28% to 24%

 

Landlords who paid Capital Gains Tax (CGT) at 28% before the Chancellor lowered it to 24% in this month's Budget are reportedly still eligible to receive a portion of their money back. The Enterprise Investment Scheme's large reliefs appear to be the reason for the likelihood.

 

The Chancellor stated in the budget earlier this month that the CGT levied on sales of residential property other than your principal house will decrease to 24% on April 6th 2024, from 28%. The goal of the action is to promote home sales, expand the supply of available dwellings, and maybe raise total tax revenue. However, you won't be eligible if you sold a home within the past year.

 

On the other hand, some experts assert that if sellers utilize the little-known CGT deferral advantages offered by the Enterprise Investment Scheme (EIS), they may still be eligible for the reduced CGT rate. The government established the program to encourage investment in smaller businesses. It provides substantial tax benefits, such as CGT deferral and upfront income tax of 30%, to entice investment.

 

You can postpone paying CGT until the EIS investment is realized by investing the gain from a CGT-liable investment into an EIS qualified investment. The CGT rate that is applied is the one that is in effect when the EIS investment is realized.

 

Assuming no changes to the tax rate occur soon, buy-to-let investors who sold their homes in 2023–2024 (and maybe up to three years sooner) may be able to postpone any CGT liability and pay it at the reduced 24% rate in the future.

 

 

#property #landlords #rental

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