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Capital gains tax exclusion top concern for landlords

The exemption of residential property from capital gains tax (CGT) cuts has become a top concern for landlords, according to research by Amicus Property Finance.

Nearly two-thirds (63%) of the surveyed landlords believe that the decision to maintain existing CGT rates on residential property will be their biggest challenge over the next 12 months, while reducing sales by 8% on assets will also prove problematic. 

In Budget 2016, the higher rate of CGT was cut from 28% to 20%, and the basic rate from 18% to 10%.

CGT rates for residential property will remain at 28% (higher rate) and 18% (lower rate).

61% of respondents also stated the removal of tax relief on mortgage interest as a major concern.

From April 2017 landlords will no longer be able to claim tax relief (40% or 45%) of the interest payments on buy-to-let mortgages.

The maximum tax relief will be set at 20% which will be introduced over a 4 year period until 2020.

Despite tax concerns, landlords have listed one bedroom flats (25%) and student accommodation (24%) to offer the most attractive capital return over the next 12 months.

John Jenkins, CEO of Amicus, said

“The findings show flats are the clear winners over houses and maisonettes for both capital growth and rental yields and this is reflected in our own personal experience in servicing professional landlord’s short-term borrowing requirements.” 

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