Commenting on today’s Autumn Statement, Daniel Crowther, Partner in the Private Client Advisory Practice, at KPMG in the UK, said:
“This exemption applies to a property that has been a person’s private residence at some point even though they may not be living in the property at the time they dispose of it and they may be claiming private residence relief on another property at the same time. From 6 April 2014, this will be halved from 36 months to 18 months."
“Essentially what has been announced today reduces the incentive to ‘flip’ a house – that is to buy a property, use it as a principal private residence and continue to benefit from the CGT exemption for the next three years."
“Affected owners may well be tempted to try to sell up before this measure bites so we could see a rush of properties coming to the market in the next four months. Whether this will cool the housing market will remain to be seen.
“There may be an extent to which this measure puts people off relocating for work purposes. It’s quite common that if an owner-occupier is offered a job in a different location to their home, they might rent a flat or house to live in and keep their home a while before they sell it. The reduction to this final period exemption makes this a less attractive option.”
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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.