Tax issues when disposing of a UK rental property

With the buy-to-let market still holding up despite a raft of potential tricky tax changes, many people will dispose of a rental property in their lifetime. Lynsey Lord, tax manager at Mercer & Hoe, explores some of the factors which can affect the tax position on such a sale

Deductible costs

The simplest way of reducing a capital gain is to ensure all costs of acquisition and sale are claimed together with any capital improvements. Capital improvements encompass a wide range of expenditure but all costs not already deducted against rental income should be reviewed.

Main residence and lettings relief

If the property has ever been used as a main residence by the vendor, principal private residence (PPR) relief should be available to exempt part of the gain from capital gains tax (CGT). This relief is available to individuals and certain trusts.

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Deductible costs

Main residence and lettings relief

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