This is the tax relief that we all rely on to exempt the profit on our home from tax when we sell it. The rules are changing…
If you own a property that was your main residence at some point previous but you have not yet sold it, you are currently entitled to continue to claim the principle private residence relief exemption for the last three years (36 months) of your ownership, regardless of the fact that you no longer live in it. This relief was intended to avoid penalising individuals who found it difficult to sell their home after they had vacated it.
The Government have already announced that from 6 April 2014 this additional exemption will be restricted from a period of 36 months down to only 18 months.
This measure will have affect where contracts for the sale of the property are exchanged on or after 6 April 2014. If contracts for sale are exchanged on or before 5 April 2014 and completed on or before 5 April 2015 the period will also remain at 36 months.
This gives a very small window of opportunity for anyone who moved out of their former home more than 18 months ago to act if they want to secure this tax relief for the whole of their period of ownership.
In recognition that a person moving into care may take longer to decide to dispose of their former home, the period will remain at 36 months for this group of people only.